Approved multifamily rights drive Danvers hotel sale

JLL Capital Markets arranged the $13.5 million sale and financing of the 96-room Residence Inn Boston North Shore/Danvers at 51 Newbury St. in Danvers, Mass., about 20 miles north of Boston, to Torrington, which acquired it with conversion rights approved in advance for 88 multifamily units, Connect CRE reports. The hotel will keep operating under the Residence Inn brand for an initial period before the conversion moves forward, while JLL represented the seller, an affiliate of PEG Companies, and also secured acquisition financing for Torrington.

At $13.5 million, the transaction values the asset at roughly $140,600 per existing room and about $153,400 per planned apartment. The second figure is the one Torrington is buying: an entitled multifamily basis in a high-barrier suburban Boston market, as JLL's Alan Suzuki puts it, with severe housing constraints and strong rental demand. The hotel income covers the carry while the approval is already in hand.

The seller's case, as Suzuki put it, is a de-risked path into the North Shore; Torrington's is simpler: approved multifamily units at a price hotel cash flow alone would not justify, with a Residence Inn sign out front until construction. In a region where ground-up development is slow and expensive, buying existing keys with conversion rights is how apartments get added; the hotel income carries the wait.