Mandarin Oriental International Limited is purchasing the freehold interest in the building that houses the Mandarin Oriental, Boston together with its hotel business for $140 million.
Mandarin Oriental has managed the 148-room hotel on Boylston Street under a management contract since it opened in 2008. The Group also manages 85 privately owned Residences at Mandarin Oriental connected to the Hotel.
As part of the long-term management contract, Mandarin Oriental has exercised its right to acquire the hotel from CWB Hotel Limited Partnership. The hotel was offered for sale by auction, and "a number" of bids had been received, the company said in a statement. Under Mandarin Oriental’s management contract, it has the right to acquire the property for a sum equivalent to the highest bid, which Hilton made last month.
Mandarin Oriental’s total investment of $140 million will be funded through a mixture of existing cash reserves and debt. Even better, the acquisition is anticipated to have a positive impact on the group’s earnings: For 2014, the Hotel generated EBITDA of $5.0 million. For the same period, the group received management fees and other contributions of $2.3 million, which were charged against the hotel’s EBITDA.
Completion of the sale and purchase of the Hotel, subject to final court approval of the terms agreed at auction, is currently expected to take place in the first quarter of 2016.