SOUTH BOSTON, MA HOTELBUSINESS. has learned that if Starwood Hotels & Resorts fails to wire the necessary $14 million in non-refundable deposits to the Massachusetts Convention Center Authority (MCCA) by 5:00 p.m. today, the MCCA may very well offer the South Boston Convention Center project to Marriott International, according to Geoffrey Baekey, manager, PricewaterhouseCoopers. As of yet, no money has been transferred.
Last year, a joint venture between Starwood and Carpenter & Co. won the competitive bid for a 1,120-room Sheraton hotel project, with Marriott and Boston Properties coming in second. However, since then, the Starwood team has struggled to find equity financing.
Having already gotten its deadline extended twice, Starwood now has only a few more hours to secure the $270 million hotel project, which would be attached to the new South Boston Convention Center.
The success of the convention center is contingent on the development of the hotel, and vice-versa, said Baekey.
Although the convention center is set to open in late 2003, funding has been hard to find. Last spring, FleetBoston Financial Corp. offered to provide a construction loan, but an insufficient projected return on the investment, along with weak market conditions, have hampered the deal. Both the MCCA and Starwood have offered concessions to make the deal more attractive to investors.
A lot of energy has been put in restructuring the deal, Baekey said.
The MCCA said it would reduce the $12.6 million annual rent that Starwood agreed to pay, and Starwood and Carpenter said they would accept a smaller development fee. Starwood is also hoping for a break on real estate taxes, but according to Baekey, the City has been unwilling to grant that, saying it will not consider a tax break until it the last resort. Losing Starwood would probably mean that the anchor hotel would not open until after the convention center.