BOSTON–Taj Boston, which is owned by Indian conglomerate Tata and was on the market for reportedly $125 million, is being brought by local real estate development firm New England Development and Eastern Real Estate, according to media reports.
Boston Globe said that New England Development, the real estate firm founded by mall mogul Stephen Karp, and Eastern Real Estate are leading a group of investors to buy the luxury property, which has been owned for a decade by Tata.
The group has the property under contract, with plans to keep the Taj flag out front but to “redefine the vibrant and luxurious potential” of the grand hotel overlooking the Public Garden, Boston Globe said.
According to Boston Globe, the buyers, who also include developer Lubert-Adler and the private equity firm Rockpoint Group, didn’t disclose a price. But the Taj’s parent company, Indian Hotels Co., said this month that it planned to sell the property for no less than $125 million, which would reflect something of a bargain compared with other recent sales of high-end hotels in Boston.
Formerly the Ritz-Carlton, the hotel on the corner of Newbury and Arlington streets remains one of Boston’s finest, with an opulent lobby and a beloved tea service. But the building is 90 years old, and industry experts say it has fallen a step behind competing five-star properties such as the Mandarin Oriental and the Four Seasons, both on Boylston Street. Meanwhile, Indian Hotels’ financial reports indicate it has lost money in recent years, Boston Globe said.
Boston Globe said that Karp and his partners did not immediately share any plans for how they would improve performance at the hotel. Karp made his name with malls, opening Liberty Tree in Danvers in 1972 and founding New England Development shortly thereafter. The firm went on to develop Northshore Mall and CambridgeSide Galleria, as well as other retail, commercial, and residential projects in Massachusetts and across the country. Karp also serves as chairman of Boston Children’s Hospital.
New England Development and Eastern have partnered on a number of projects, most recently the newly opened University Station in Westwood. The firm owns hotels in Nantucket and Newburyport, but Karp does not have a lot of experience with big urban properties, according to Boston Globe.
It was just this month that Indian Hotels announced it was selling the hotel — which it bought in 2007 for $166 million — in a plan to shed debt and focus on its core markets in the Persian Gulf and South Asia, according to Boston Globe.
Earlier, Boston Business Journal had reported that the hotel sale will be used to pare down debt for the company. The hotel has operated at a loss in recent years, most recently generating $34.1 million in revenue in fiscal 2015/6 but notching a loss of $7.3 million, Indian Hotels outlined in the letter to the Bombay Stock Exchange.