The Harvard Club of Boston in Back Bay closed an $8.8 million deal with SeaDar Real Estate and CW Partners late last month to turn over most of its adjacent annex building, which will be converted into five luxury condominiums.
Following a year and a half of trying to leverage the space on Commonwealth Avenue for capital, the real estate transaction will help to “to reverse the trend of annual operating losses that had burdened the Club in recent years,” its president Michael H. Shanahan wrote on his blog.
The sale results in the loss of 17 overnight rooms, but the Club will retain ownership of its main dining room, the Back Bay private dining room, and the basement for administrative offices, all of which are housed in the annex. Though its members primarily consist of Harvard alumni, the club is not affiliated with the University.
The club's recent financial burdens can be traced in large part to Septemeber 2012, when management agreed to a legal settlement after its wait staff alleged that the club had violated the Massachusetts “tip law.” The settlement cost the club $4 million; a final payment of $1.4 million is scheduled to be made in December 2015.
Shanahan also wrote that many of the overnight rooms lost through the sale shared a hallway bathroom and were not elevator accessible. He added that the Club’s “overall occupancy rate has run in the low 50% range for the past few years [...] the occupancy on the rooms we are losing was less than half the overall rate.”
In addition to putting the annex up for sale, the Club began imposing a monthly “facility renewal assessment” fee last year, ranging from $10 per month for full resident members to $2 per month for those under 30. These funds, amounting to about $300,000, in addition to another roughly $700,000 in other funds, will be allocated to infrastructure and facilities improvements. They include a renovated Boston Room, a new handicap-accessible rear entry, updates to the remaining 25 overnight rooms, and the installation of an additional elevator.
The club's vice president Karen M. Van Winkle ’80 said that she was “extremely excited” about the upcoming rennovations, which she considers to be “a great benefit to members.”
Overall, the organization rebounded from a $200,000 operating loss in fiscal year 2013 to an expected operating surplus of $1.3 million in fiscal year 2014, according to the Club President’s blog.
“As a not for profit entity, the Club is required to reinvest the proceeds from this sale of property back into the Clubhouse within a three year period, so we have every intention of using the funds from this sale to make improvements that will prepare the Clubhouse for its next 100 years,” Shanahan wrote.
—Staff writer Amna H. Hashmi can be reached at email@example.com. Follow her on Twitter @amna_hashmi.