Sheraton Boston Hotel sold for $233 million to joint venture

The largest hotel in the city of Boston is now under new ownership.The Sheraton Boston Hotel — a 29-story, 1.1 million square foot property — has been sold from Host Hotels & Resorts, Inc. to Värde Partners and Hawkins Way Capital for approximately $233 million.Host Hotels & Resorts is also providing a $163 million bridge loan to the two investment firms in connection with the hotel sale.According to Host Hotels, the sale price represents a 14.2x Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) multiple on 2019 EBITDA, which includes approximately $135 million of estimated foregone capital expenditures over the next five years.”The sale of the Sheraton Boston allowed us to redeploy capital into other assets that we believe will bolster the EBITDA growth profile of our portfolio,” James F. Risoleo, president and chief executive officer of Host Hotels, said in a statement — which also announced the company’s acquisition of the Hotel Van Zandt in Austin, Texas, for approximately $246 million. The Sheraton Boston Hotel has 1,220 rooms and is located on Dalton Street in Boston’s Back Bay neighborhood.The hotel is being sold just six months after the hote l reopened following a lengthy COVID-19-related closure from March 2020 to Aug. 1, 2021.Conventions at the nearby Hynes Convention Center have been scarce, and Northeastern University has leased a block of rooms at the Sheraton Boston for student housing.The purchase of the Sheraton Boston Hotel marks the sixth acquisition of the Värde Partners and Hawkins Way Capital joint venture, which is targeting over $1 billion of value-add and distressed hospitality and housing assets in major US cities.The joint venture’s portfolio also comprises the DoubleTree by Hilton Metropolitan in the heart of Midtown Manhattan, along with four other residential developments in New York and California. “Our strategy for the joint venture is to build a high quality, inflation protected, and cash flow generative portfolio in major US cities,” Francisco Milone, partner at Värde Partners, said in a joint statement. “The pandemic is driving this opportunity among distressed hospitality and select housing assets in gateway markets with high demand for certain alternative hospitality, residential, and student housing products.” “We will continue to leverage our hospitality, multifamily and student housing expertise to refresh and /or reposition assets such as the Sheraton Boston Hotel in order to seek to maximize value,” Ross Walker, co-founder and managing partner of Hawkins Way Capital, said in the joint statement.Värde Partners, a leading global alternative investment firm with roots in credit and distressed assets, was founded in 1993. The firm has invested $85 billion since inception and manages approximately $14 billion on behalf of a global investor base. Hawkins Way Capital is a vertically-integrated real estate company with over $1.5 billion of assets under management on behalf of institutions and individuals focused on value-add and opportunistic investments across various asset classes and geographies.

The largest hotel in the city of Boston is now under new ownership.

The Sheraton Boston Hotel — a 29-story, 1.1 million square foot property — has been sold from Host Hotels & Resorts, Inc. to Värde Partners and Hawkins Way Capital for approximately $233 million.

Host Hotels & Resorts is also providing a $163 million bridge loan to the two investment firms in connection with the hotel sale.

According to Host Hotels, the sale price represents a 14.2x Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) multiple on 2019 EBITDA, which includes approximately $135 million of estimated foregone capital expenditures over the next five years.

“The sale of the Sheraton Boston allowed us to redeploy capital into other assets that we believe will bolster the EBITDA growth profile of our portfolio,” James F. Risoleo, president and chief executive officer of Host Hotels, said in a statement — which also announced the company’s acquisition of the Hotel Van Zandt in Austin, Texas, for approximately $246 million.

The Sheraton Boston Hotel has 1,220 rooms and is located on Dalton Street in Boston’s Back Bay neighborhood.

The hotel is being sold just six months after the hotel reopened following a lengthy COVID-19-related closure from March 2020 to Aug. 1, 2021.

Conventions at the nearby Hynes Convention Center have been scarce, and Northeastern University has leased a block of rooms at the Sheraton Boston for student housing.

The purchase of the Sheraton Boston Hotel marks the sixth acquisition of the Värde Partners and Hawkins Way Capital joint venture, which is targeting over $1 billion of value-add and distressed hospitality and housing assets in major US cities.

The joint venture’s portfolio also comprises the DoubleTree by Hilton Metropolitan in the heart of Midtown Manhattan, along with four other residential developments in New York and California.

“Our strategy for the joint venture is to build a high quality, inflation protected, and cash flow generative portfolio in major US cities,” Francisco Milone, partner at Värde Partners, said in a joint statement. “The pandemic is driving this opportunity among distressed hospitality and select housing assets in gateway markets with high demand for certain alternative hospitality, residential, and student housing products.”

“We will continue to leverage our hospitality, multifamily and student housing expertise to refresh and/or reposition assets such as the Sheraton Boston Hotel in order to seek to maximize value,” Ross Walker, co-founder and managing partner of Hawkins Way Capital, said in the joint statement.

Värde Partners, a leading global alternative investment firm with roots in credit and distressed assets, was founded in 1993. The firm has invested $85 billion since inception and manages approximately $14 billion on behalf of a global investor base.

Hawkins Way Capital is a vertically-integrated real estate company with over $1.5 billion of assets under management on behalf of institutions and individuals focused on value-add and opportunistic investments across various asset classes and geographies.

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