The guest list of the Taj Boston, formerly a Ritz-Carlton, includes a who's who of twentieth-century luminaries: ranging from beloved crooner Frank Sinatra to influential statesmen Winston Churchill. Even some of the US’ most famous dogs, such as Lassie and Rin Tin Tin, frequented the once unrivaled hotel.
Yet, in recent years the two-tower property has been somewhat struggling. Occupancy was down from 79 percent in 2014 to 77 percent in the last nine months of 2015, according to the most recent analyst presentation. Last year the property lost $7 million on $34 million in revenue, and excluding interest, depreciation and taxes, the loss was $600,000. In a May statement, its owner Indian Hotels said it was reevaluating its portfolio to reduce leverage and focus on markets with the greatest opportunity for profit, making a sale likely.
A quadruple joint venture comprising private equity real estate firms Rockpoint Group and Lubert-Adler and developers New England Development and Eastern Real Estate saw an opportunity to return the hotel to its former glories.
The four agreed to buy the 273-room hotel from the Indian hotel firm Taj Group in a transaction that is expected to close this month. The terms of the deal were not disclosed and a spokeswoman for the new owners declined to comment, but PERE understands that Indian Hotels, the parent company of the Taj Group, sold the hotel for at least $125 million with the stipulation that the new owners would keep its name.
Indian Hotels, a subsidiary of Mumbai-based Tata Group, bought the property from New York-based developer Millennium Partners in 2006 for $170 million, according to real estate data provider Real Capital Analytics (RCA).
At a $125 million price tag, the cost for the Taj Boston works out to about $458,000 per room. Other local high-end hotels have fetched much more in local transactions: In January, Hong Kong-based Mandarin Oriental Hotel Group paid
$140 million, or about $946,000 per room, to buy the Mandarin Oriental out of bankruptcy. The Taj Boston’s comparatively lower price tag may stem from the buyers’ agreement to retain the Taj’s name and from the hotel’s gloomy finances.
While the new owners’ initial investment may not have matched other peer hotels’ selling prices, the group may spend significantly once the hotel officially changes hands. The joint venture has kept its plans under wraps, but Eastern Real Estate’s principal hinted at future renovations, saying in a statement that the group seeks to “redefine the vibrant and luxurious potential” of the hotel. Local media further hinted at possibilities for that redefinition, including sprucing up the lobby’s retail components or replacing some of the hotel rooms with condominiums. The hotel’s current amenities include a fireplace butler, rooftop brunch, afternoon tea and luxury retailer Tiffany & Co in the lobby. Room rates range from $300 per night to $6,000 for the 1,500 square foot presidential suite.
Opened in 1927 as the Ritz Carlton Boston, before Indian Hotels rebranded the property in 2007, it was the oldest continuously operating Ritz in the country. As one of Boston’s two pre-eminent luxury hotels, long before the arrival of the Mandarin, the Four Seasons and other contemporary competitors, the hotel hosted heads of state and celebrities. If one believes local lore, the hotel was also the source of inspiration for its creative guests. Tennessee Williams supposedly wrote some of the award-winning play A Streetcar Named Desire, and Broadway composers Richard Rodgers and Oscar Hammerstein were said to have penned the lyrics to The Sound of Music hit song Edelweiss during their stay.
After the transaction closes, the new owners will be aiming to create twenty-first century legends and stories.