A German real estate fund has paid $173.9 million for the Godfrey Hotel in Boston’s Downtown Crossing before it’s checked in its first guest.
Hamburg-based Union Investment Real Estate acquired the 242-room property from Chicago-based Oxford Capital Group and Walton Street Capital. At $718,000 per room, the price is believed to be among the three highest ever paid for a Boston hotel.
“Hotel development in Boston is extremely difficult, and (the Godfrey) is in a rapidly improving location,” said Denny Meikleham, a managing director for HFF Inc. “Oxford Group bought it at a great price, and during the renovation process the hotel market in Boston got better and better.”
The hotel is scheduled to open in January at Washington Street and Temple Place. Oxford Capital bought the Amory and Blake buildings containing office and retail space in 2012 for $23.25 million and renovated the property to capitalize on the revitalization of the Downtown Crossing neighborhood.
Guest rooms will contain high-tech amenities including Bluetooth audio systems and 55-inch TVs with streaming capability. The property will contain a high-end restaurant, coffeehouse, lobby bar and fitness center.
Greater Boston’s hotel market is one of the nation’s strongest, with steady demand from business and leisure travelers boosting occupancy rates and room fees.
The current occupancy rate is nearly 77 percent, compared with the national average of 66 percent, according to Andrea Foster, a senior vice president with Marcus Hotels and Resorts. Nearly 4,000 additional hotel rooms are expected to be completed in the region by 2018.
Oxford opened its first Godfrey brand hotel last year in Chicago’s River North neighborhood.
The transaction is structured as a 25-year lease for the 135,000-square-foot hotel’s rentable area, according to a press release, and contains a profit-sharing component. The hotel will become the first U.S. holding in Union Investment’s hotel portfolio, purchased by its Unilmmo: Europa open-ended real estate fund which invests in a variety of commercial property types.
