Court Ruling Clears Way for Continued Ownership of W Hotel and Sale of The Luxury Condominiums
BOSTON--A US Bankruptcy Court judge has given a green light for the continued sale and development of the luxury W Hotel & Residences in Boston, in the process striking down an effort by Prudential Insurance Co. to foreclose on its developer, SW Boston Hotel Venture LLC.
Judge Joan Feeney ruled that the developer has shown that it is making clear progress in stabilizing its financial picture through ongoing sales of the high-end condominiums, and should be allowed to continue that progress without the threat of foreclosure by Prudential.
Prudential had provided a $192 million loan in January, 2008 for the development of the W Hotel and the 123 condominiums on Stuart Street in Boston. The city of Boston had also provided a loan of $10.5 million. The ruling noted that the developers still owe the city about $6 million.
Caught up in the financial crunch that has stalled condo sales nationwide, the W Hotel & Residences filed for Chapter 11 bankruptcy in 2010. Shortly thereafter, Prudential went to court seeking to foreclose on the property.
In her ruling, Judge Feeney said that SW Boston Hotel Venture LLC “was moving in a meaningful direction” to propose a plan that has “a reasonable chance of success in a reasonable amount of time.”
As evidence of that progress, Judge Feeney noted the developer’s three-year sales program for the residences and a positive cash flow for the hotel.
The judge also cited the credentials of Kevin Ahearn, Pres. of Otis & Ahearn, and what she termed his “mastery of the history and trends in the Boston real estate market.”
“We are extremely gratified with this decision,” said attorney Harry Murphy of the law firm Murphy & King. “It is a strong endorsement of our reorganization plan, and recognizes its solid prospects for success. “
Said Ahearn: “Boston is recovering faster than the rest of the country and the downtown condominium market held values during the financial crisis and recession. Additionally, the inventory is dropping dramatically which will put upward pressure on prices.”
Ahearn added: “We have good sales momentum, including two new reservations on very expensive units on the top of the building.”
Project developer Carol Sawyer Parks, CEO of Sawyer Enterprises said: “We are pleased with the ruling, the operating progress of the hotel, and the sales velocity through this very difficult period of time, as it prepares us for our evolving reorganization plan.”