BOSTON-Sunstone Hotel Investors, based in Aliso Viejo, CA, said Tuesday it had closed on its $250-million acquisition of the landmark 1,053-key Boston Park Plaza hotel here. First announced in early May, the acquisition was structured as a tax-deferred exchange, funded with a combination of proceeds received from the sale of four hotels and a commercial laundry facility this past January, cash on hand and the assumption of a non-recourse loan secured by the property.
Sunstone paid nearly double what the Rockpoint Group paid to acquire the Park Plaza from Starwood Hotels & Resorts in 2011. The Boston Globe said that at that time, the 86-year-old hospitality asset fetched $126 million.
Since then, Rockpoint made investments in the property, among them adding 100 rooms. Sunstone, which owns other hotels in the Boston area, plans a further $15 million in upgrades to the façade, elevators and other infrastructure, along with renovations to 43,000 square feet of ground-floor retail.
“This transaction completes the tax-efficient recycling of proceeds from the sale of non-core assets earlier this year,” Sunstone CEO Ken Cruse says in a release. “We look forward to executing on a comprehensive asset management plan designed to maximize the value of this grand Boston landmark.”
The loan assumed on the Park Plaza has a principal outstanding balance of about $119.2 million. It bears an interest rate of 4.4% and matures in February 2018. The hotel will remain unbranded and will continue to be managed by Highgate Hotels.
The hotel opened its doors in 1927 as the Statler Hotel, and reportedly was among the first to put a telephone in each guest room. It has operated under its present name since 1976.