The decision by a bankruptcy court in favor of the W Hotel and Residences means that the developer of the luxury condo/hotel complex will stay in control of the project, reflecting the overall strength of the downtown Boston real estate market. A victim of the world economic slowdown, The "W" filed for bankruptcy last April, just six months after it opened.
Judge Joan N. Feeney ruled in favor of SW Boston Hotel Venture LLC, the developer of the mixed-use project. She concluded that the company “has shown sufficient progress during this Chapter 11 case to support the conclusion that there is a reasonable possibility of a reorganization within a reasonable time,” according to the court ruling. As a result, Prudential Insurance Company of America, the main lender, will not be able to foreclose and take control of the project and the developer will be given time to file a reorganization with the court and be able to market and sell the condos without interference.
The judge based part of her decision on the testimony of Kevin Ahearn of Otis & Ahearn, the developer’s marketing team. The well-respected Mr. Ahearn is an expert in the local real estate market, so his opinion carried much weight.
The future of Boston's W Hotel and Residences
I estimate that the W has sold 29 of its 123 condo units (23 percent) and another six are under agreement. I know that the sale of at least one multi-million penthouse unit is being negotiated. The judge's decision mentions that the W Boston will be renting out 25 percent of its condo units in order to raise several million dollars during the next couple of years but, as of now, I’m only aware of one unit being available for rent (a furnished studio for $2,750).
With many units available in the $850 - $1,000 per square foot basis, the pricing seems on par with new developments in the downtown Boston market (and, to some, would even be considered a bargain). The pricing is a reflection of the times while recognizing the location of the project, being on the outer-edge of both the theater district and Back Bay.
What this means for the Boston real estate market
The turn of events is obviously great for the developer (and present condo-owners) but it also reflects well on the Boston real estate market. The judge ruled that there was a good chance the marketing company could sell the remaining units between now and 2013, which breaks down to two to three units closing per month. That’s aggressive given the past performance of this and other, new, downtown Boston developments (45 Province and The Clarendon, specifically), but the judge wouldn’t rule in the W’s favor unless she thought it was possible.
Rumors breed uncertainty. Given the news out of the court, this should put to rest a lot of concerns of potential buyers. The timing couldn’t be better, with the local real estate market pulling out of the doldrums and the spring market about to get underway.