“The debtor has demonstrated no ability to mount a fresh sales campaign to rehabilitate its business or otherwise reorganize nor does it have any prospects for such reorganization on the horizon.”
Those are the words of Prudential Insurance Co., the main debt holder of the W Boston, and foreshadow their desire to foreclose on the Boston W Hotel and the developer behind it SW Boston Hotel Venture LLC, doing business as Sawyer Enterprises.
Sales velocity at the now-bankrupt W Boston has been slow, a trait not uncommon to other new luxury condo developments that were delivered during the US’ great recession (see Ultra Luxury Condo Sales Velocity Low). Prudential has been unimpressed, to say the least, with what Sawyer is doing about that trend.
Sawyer’s idea of renting out units in the high-end development located in the Theatre District of Boston appears to be laughable by Prudential. Much like the rough stigma of the neighborhood itself, which has arguably gotten better since the W broke ground, Prudential doesn’t want a transient rental base to taint a fresh product, leaving it difficult to ultimately sell.
Prudential Wants Their Money Back from Boston W
All of this foreshadows the ultimate goal of Prudential, which simply put, is to get their money back. Renting out a select set of units in the building may provide short term cash flow, but does little if anything to bolster Sawyer’s ability to make its balloon payment, and some would say, would ultimately detract from it.
Inevitably, if a significant cash infusion does not come quickly, the public is going to see another Boston condo auction. Should Prudential take back the deed to this property, they’ll have no desire to hold it, and will attempt to liquidate as quickly as possible. The few current owners in the building will, unfortunately, be stuck in the same position that those at Nouvelle at Natick have faced since they originally bought at high price per square foot values, only to see that price significantly diminished by an auction that was forced in the wake of the property developer’s bankruptcy proceedings.
Where is Otis & Ahearn in all of this? O&A being the exclusive sales and marketing firm that is responsible for selling the W Boston units into the market. They have had a relatively unblemished track record of selling out buildings across the downtown market, including a complete sell out of 285 Columbus Lofts, a development that sits on the border between the South End and the Back Bay, in quick order. Undoubtedly, if they continue on point with the project, buyers will see creative and fresh approaches to speeding up sales velocity.
City of Boston’s $10.5 Million Loan to Boston W Hotel
The City of Boston infused $10.5 million into the project during 2009 to ease completion, and almost regardless of where they stand in the debt stack where there are different classes of debt, called tranches, that public money will take a long time to return home. However, there’s little debate that bringing the structure to market that replaced the former parking lot and hole in the ground, and new jobs, was a positive addition to the city of Boston, and depending on how the debt repayment goes, a good investment.