The Inn at the Black Olive, a boutique hotel in Fells Point, was sold at auction for $3.9 million Thursday to mortgage holder 1st Mariner Bank.
Bidding for the South Caroline Street hotel, restaurant and cafe-market opened at $2.5 million, said Bradd Caplan, auction agent for Alex Cooper Auctioneers Inc. One other registered bidder competed to buy the 12-suite luxury inn, he said.
The two-year-old inn will remain open and continue to be run by the Spiliadis family, said Stelios Spiliadis, whose family operates the inn and separately runs the Black Olive restaurant on Bond Street nearby.
Separate corporate entities controlled by the Spiliadis family operated the hotel and owned the real estate, he explained. The entity that leases the building and operates the hotel will continue that arrangement with 1st Mariner Bank, Spiliadis said Thursday.
"The 1st Mariner Bank has given us the authority to continue the programs as if nothing has changed, and we will be doing that," Spiliadis said.
Spiliadis said he is continuing to put together a group of investors to mortgage the property back from the bank, which would allow the inn not only to continue operating but to expand its offerings.
First Mariner foreclosed on the hotel's developer, Black Olive Development Co. LLC, in January, listing mortgage debt of $5.4 million. A foreclosure auction that had been scheduled for March was canceled after Black Olive Development filed for a Chapter 7 bankruptcy. A bankruptcy judge approved Thursday's auction last month.
Spiliadis said an entity called Olive Grove Catering had been operating the inn, the Olive Room restaurant and Agora, the cafe-market.
The investors plan to create a new corporation to take the place of Black Olive Development, he said.
"That entity will continue what we're doing and expand it more," he said. "In the future we will be doing something more elaborate in terms of implementing what we've always done."
Spiliadis said the Black Olive restaurant on Bond Street is a separate entity and "has been flourishing and continues to flourish."
The inn was developed and is run by Spiliadis; his wife, Pauline; and their son, Dimitris. The family owners have focused on "green" architecture, installing features such as geothermal heating, sustainable wood furnishings and a green roof.
The city of Baltimore selected the family's bid in 1999 to develop the former gas station site, but the hotel did not open until 2010.
Rooms with harbor-view balconies and spa bathrooms go for $300 or more per night on weekends.
Tourism experts have said the recession and slow recovery have made it difficult for tourism-dependent businesses at a time when downtown Baltimore has added hundreds of new hotel rooms.
The area in and around downtown added more than 970 hotel rooms in the past four years, according to the Downtown Partnership.
Boutique hotels such as the Inn at the Black Olive have the added challenge of competing with larger, branded hotels. Since the inn opened, the 256-room Four Seasons opened in 2011 in nearby Harbor East.