FelCor to Buy Boston’s Fairmont Copley Plaza for $98.5M in Cash
- Aug 02, 2010
August 2, 2010
By Barbra Murray, Contributing Editor
The Fairmont Copley Plaza in Boston is on track to come under new ownership, now that Irving, Texas-based FelCor Lodging Trust Inc. has signed on to acquire the 383-room historic hotel property from an affiliate of Toronto, Ont.-headquartered Fairmont Hotels & Resorts. The price tag: a cash sum of $98.5 million.
Less than $100 million for a prominent luxury hotel in Boston is quite a bargain. FelCor acknowledges that a purchase price of approximately $257,000 per-key is a significant discount to replacement cost.
Originally developed in 1912, Fairmont Copley Plaza sits at 138 St. James Avenue on Copley Square in Boston’s prestigious Back Bay area. In addition to a plethora of guestrooms, the upscale property also features 23,000 square feet of meeting space, as well as The Oak Room restaurant and The Oak Bar. The hotel underwent a $25 million upgrade in 2004 and FelCor plans to invest $20 million in a capital improvement plan.
FelCor was attracted to the property for a variety of reasons, including the all-important location, location, location. “The hotel is in one of the better locations in Boston, specifically Back Bay, where barriers to entry are very high,” Stephen A. Schafer, FelCor Vice President Strategic Planning & Investor Relations, told CPE.
While nary a hotel market in the U.S. escaped the ravages of the global economic crisis, the Boston hospitality market, Schafer contends, has incredible promise in the near term. “The market will perform well this year and we expect it to perform even better in the future because of the supply and demand dynamics,” he said. “On the supply side, there were only two hotels built in Boston in the last seven years and there are none in the pipeline. As for demand, Boston is a dynamic market from the leisure travel, business travel and group meetings standpoints. We see a lot of growth in the market. And with the capital we’re spending and the changes in asset management, we think there’s a substantial amount of upside beyond the market.”
Real estate services firm CB Richard Ellis Hotels orchestrated the sale transaction on behalf of Fairmont, which, having signed a long-term agreement with the new owner, will stay on in its role as manager of Fairmont Copley Plaza.