"This opportunity is an excellent fit with DiamondRock's strategy of building a portfolio of high-quality, high-growth hotels located in urban and resort locations," says William McCarten, chairman and CEO of DiamondRock, in a statement.

Michael Schecter, executive vice president and general counsel with DiamondRock, tells GlobeSt.com that the building rights on the adjacent site would allow for a separate 325-room hotel. All three properties, which are held by a joint venture comprised of Boston developers Joseph Fallon, Stephen Karp and Steve Fischman, come with a 99-year ground lease from the Massachusetts Convention Center Authority, Schecter says.

DiamondRock paid a $3-million, non-refundable deposit to the owners. The sale of the hotel and the development site is expected to close later this quarter. The retail space should close later this year.

The acquisition will be the first Boston asset acquired by the two-year-old firm, which owns 20 hotel properties in 10 states and the Virgin Islands.

The retail component, which comes with the hotel purchase, is a separate 100,000-sf, three-floor building. According to a statement about the pending acquisition, DiamondRock executives say the company plans to turn some of the 100,000 sf of retail space into meeting and exhibit space and then lease the remaining to retail tenants.

The plot, ripe for development, is 1.5 acres and currently vacant. Zoning allows for a 325-room property with 100 underground parking spaces. According to the release the development could be attached to the convention center. DiamondRock acknowledges the new hotel could be an expansion of the Westin or a different Starwood brand.

The Westin Boston Waterfront Hotel also has the right to use 50,000 sf of meeting space and 40,000 sf of ballroom space at the BCEC, as available, through 2017.

Schecter says the asset will fill two voids in the company's portfolio at once, giving it ownership in both a Boston property and a convention hotel. "We're very excited by it," he says, noting that the property's location in the city's rapidly expanding Seaport District should reflect "a ton of potential down the road."

"The combination of the Seaport District growth and the normal ramp up of a convention hotel should yield several years of outsized growth," says John Williams, president and chief operating officer of Diamondback, in a statement.

The hotel, which opened in June, along with the retail space, is expected to generate $24.6 million in earnings for 2007 and $31.8 million for 2008 before interest, taxes and other expenses.

Instant Insights /

DiamondRock To Pay $330M for Westin Boston Hotel

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