At $370,000 per room, Kimpton Hotels & Restaurant Group is paying a hefty price to buy Boston’s Nine Zero hotel, but Acquisitions Director Joseph Long insists the opportunity is worth the investment of nearly $70 million.
“It’s a great asset,” Long told Banker & Tradesman last week after his San Francisco-based company signed a purchase-and-sale agreement for the 19-story, 189-room hotel. Nine Zero “fits perfectly with what we do.” The agreement was first reported last Wednesday on Banker & Tradesman’s Web site, bankerandtradesman.com.
Specializing in so-called “boutique hotels,” Kimpton was attracted to Nine Zero due to its location in downtown Boston and superior construction by Intercontinental Real Estate Corp., according to Long. While Brighton-based Intercontinental is not experienced in hotels, Long praised the company for delivering a product that competes well against other luxury inns. “Our hats go off to the developers,” he said. “They really did a fantastic job with the property.”
‘A Good Run’
Situated on a small parcel across from Boston Common, Nine Zero features an efficient design and luxury appointments that help justify a room rate among the highest in the city, said Long, who explained that his firm had been eyeing opportunities in the region when the 4-year-old property was put up for sale. Interestingly, Kimpton had competed for another hotel site in Boston owned by Intercontinental, but was outbid by an Irish company that has developed that building into another boutique hotel.
Kimpton, which owns and manages some 40 properties nationally, has an investment fund out seeking to acquire new hotels, but Long said the effort has been challenging due to increased investor interest in that industry. Although he could not provide exact numbers, Long said there was substantial competition for Nine Zero, including both domestic and overseas bidders.
From a physical standpoint, there is little that needs to be done to Nine Zero, said Long, although he maintained his firm can add value on the operational side given Kimpton’s 25-year track record in the hospitality industry. Nine Zero would be Kimpton’s first owned hotel in Boston, but the firm has long-term management agreements for Boston’s 112-room Onyx Hotel in North Station and the Hotel Marlowe across the river in Cambridge. That established presence should provide for synergies and greater efficiency in running Nine Zero, noted Long, who said his firm was further encouraged by recent improvements in Greater Boston’s hotel sector.
“We’re not back to the peak in 2000, but with the technology sector back on solid footing and the opening of the new convention center, we think Boston is poised for a good run with hotel properties,” Long said. “We think it bodes well for the future.”
Intercontinental Real Estate Corp. President Peter Palandjian was traveling last week and unavailable to discuss the pending sale of Nine Zero, which Long said is expected to close during the first week of May. Nine Zero was developed as part of Intercontinental’s second real estate investment fund.
