A hot property is headed for the auction block: the ultra-swanky, $645-plus-a-night Mandarin Oriental Boston hotel. The motivated seller? The Irish government.
The building, at 776 Boylston St., is one of the most exclusive addresses in the city, a five-star property with 148 rooms in the center of a booming hotel industry and a thriving real estate scene. The government entity that owns the Mandarin wants to sell the hotel and retail spaces while the market is hot. It’s asking a bankruptcy judge to approve a live auction that real estate experts say could set local hotel records and draw investors from around the world.
“The location and the brand are triple A,” said David Begelfer, chief executive of NAIOP Massachusetts, a commercial real estate association. “You’re dealing with a top quality property and market that is extraordinarily attractive to capital right now.”
The potential sale of the Back Bay hotel is part of a long-running dissolution of Anglo Irish Bank Corp., which held a controlling interest in the property. The bank collapsed during the financial crisis and was nationalized by the Irish government, which developed a corporation, Irish Bank Resolution Corp., to manage the bank’s assets.
This week the IBRC asked the US Bankruptcy Court in Delaware to sign off on an auction of the hotel and the retail property that connects the Mandarin to the Prudential Center. The group seeks a Sept. 11 auction, with a deadline for bids earlier in the month, according to court records.
Interest in the hotel property will be increased because of a “perceived discount” associated with an auction process, said Michael Byrne, the executive director at Cushman & Wakefield’s capital markets group.
Bryne said that top-shelf hotel sales are scarce in Boston, given the city’s size and number of properties. He expects the Mandarin to attract interest from local, national, and international investors.
Bryne added that investors will be encouraged by the fact that Four Seasons Hotels and Resorts recently said it plans to open a second luxury property in Boston, a sign of confidence in the market.
The $250 million sale of the Park Plaza in 2013 to Sunstone Hotel Investors of California was the most expensive hotel deal in Boston since 2007, according to data provided by Transwestern RBJ, a Boston real estate services firm.
Morgan Stanley paid $166.4 million for the Boston Harbor Hotel last year in the highest per-room sale, $723,593, for the 230-key property.
In 2008, developers Robin Brown and Stephen R. Weiner opened the $300 million Mandarin Oriental Boston complex, which includes the hotel, apartments, and retail and restaurant space.
The developers sold a controlling interest in the property when the hotel opened. Anglo Irish Bank provided financing and later took control of the property when a loan defaulted, according to court records.
A subsidiary of IBRC has already put some of the Mandarin’s 25 apartments up for sale. In January, it began marketing one- and two-bedroom apartments as leases expired, turning the units into condominiums.
The making of the Mandarin was an expensive effort that spanned 13 years and resulted in one of Boston’s more luxurious properties. The hotel also houses the famed chef Daniel Boulud’s only Boston restaurant, Bar Boulud.
Mandarin Oriental Hotel Group operates the hotel.
“It’s a beautiful building. It’s an awesome location, and it’s the Mandarin,” said Paul Sacco, president of the Massachusetts Lodging Association. “That’s a primo property.”
An attorney for IBRC and the Mandarin Oriental Hotel Group did not respond to requests for comment.