New England-Eastern RE Group to Buy Storied Taj Boston Hotel

The Taj Boston in the city’s Back Bay will retain its name after the sale.

BOSTON—An investment group led by New England Development and Eastern Real Estate has reached an agreement to acquire the Taj Boston hotel here from the Taj Group. While no financial details were released, the purchase price would be for at least $125 million if the Taj Group kept to its sales strategy. Other partners in the investment group include Rockpoint Group, LLC  of Boston and Lubert-Adler of Philadelphia. The 273-room luxury hotel on Arlington St. was acquired by the Taj Group in late 2006 .The sale to the investment group is expected to close in July and the property will remain a Taj-flagged property after the sale is consummated. New England Development is based in Boston, while Eastern Real Estate is headquartered in Woburn, MA. Millennium Partners sold the 273-room property across from the Boston Public Garden almost 10 years ago for $170 million to Indian Hotels Co. Ltd., which operates the Taj group of hotels. Millennium had operated the hotel with a Ritz-Carlton flag. New York City-based Millennium purchased the hotel in 1999 for $122 million. The hotel first opened for business in 1927. On May 16, Indian Hotels Co. in a filing to the Bombay Stock Exchange Ltd . and the National Stock Exchange of India Ltd ., stated that its Board of Directors that day approved a proposal to allow United Overseas Holding Inc., an indirect wholly owned subsidiary of the company in the United States, to sell its interest in the Taj Boston “at a consideration not being lower than US$125 million to a third party, subject to negotiations and execution of suitable agreements.” New England Development and Eastern Real Estate are partners on several other major development projects, including the 2-million-square-foot University Station in Westwood, MA. The two firms also developed Palm Beach Outlets and Marketplace at the Outlets in West Palm Beach, FL. Stephen R. Karp, chairman of New England Development , says in a statement, “We are thrilled to join with Eastern and our partners Rockpoint and Lubert-Adler to acquire this legendary hotel property—located in one of the country’s most famous shopping districts.” Daniel J. Doherty, III , a principal of Eastern Real Estate, adds, “Together our partnership looks forward to working with our new employees, the community and the City of Boston to redefine the vibrant and luxurious potential of this internationally acclaimed, iconic hotel.” According to its recent filing with the Bombay Stock Exchange, the hotel has been operating in the red for the past three years at least. Indian Hotels stated that the Taj Boston lost $7.3 million (before taxes) in fiscal year 2015-2016, which was higher than the $6.7 million the hotel lost in fiscal year 2014-2015. The previous year the hotel lost $7.8 million. Total revenue at the hotel was $34.1 million (2015-2016), $34.5 million (2014-2015) and $32.9 million (2013-2014). While not specifically blaming the losses at the Taj Boston for its decision to sell the property, Indian Hotels Co. did state in its filing that “the onset of the global economic recession impacted the fortunes of the hospitality sector around the world and thus, the company’s profitability as well.” The firm further states that recently the company has been “relooking at all options for a course correction in strategy, focusing on growth in high margin markets, evaluating the relevance of some of its existing assets in the portfolio to reduce leverage.” Another Boston luxury hotel property could also be changing hands soon. In January, Mandarin Oriental International Limited reported it hoped to secure court approval for its $140-million acquisition of the Mandarin Oriental Boston hotel. The international hotel group has managed the 148-room hotel located at 776 Boylston St. since its opening in 2008. The hotel was offered for sale in a bankruptcy auction and Mandarin Oriental said it exercised its right under a long-term management contract to acquire the hotel from CWB Hotel Limited Partnership for a sum equivalent to the highest bid.