Mandarin Oriental International Limited will acquire the freehold interest in the property that houses Mandarin Oriental, Boston together with its hotel business for US$140 million. Mandarin Oriental has managed the 148-room Hotel, which is situated on Boylston Street in Boston, under a management contract since its opening in 2008. The Group also manages 85 privately owned Residences at Mandarin Oriental connected to the Hotel.
Mandarin Oriental has exercised its right under its long-term management contract to acquire the Hotel from CWB Hotel Limited Partnership. The Hotel had been offered for sale by auction, and a number of bids had been received. Under Mandarin Oriental’s management contract, it has the right to acquire the property for a sum equivalent to the highest bid. Completion of the sale and purchase of the Hotel, subject to final court approval of the terms agreed at auction, is currently expected to take place in the first quarter of 2016.
Edouard Ettedgui, Group Chief Executive, said, “We are delighted to acquire the property that houses our luxury hotel in the heart of Boston. This acquisition ensures the continuity of our position in Boston, and we look forward to maintaining our award-winning service in this key gateway city.”
Mandarin Oriental’s total investment of US$140 million will be funded through a mixture of existing cash reserves and debt. The acquisition of the Hotel is anticipated to have a positive impact on the Group’s earnings. For the year ended 31st December 2014, the Hotel generated earnings before interest, taxes, depreciation and amortization (‘EBITDA’) of US$5.0 million. For the same period, the Group received management fees and other contributions of US$2.3 million, which were charged against the Hotel’s EBITDA.