By Jon Peterson
New York-based Carey Watermark Investors Inc. has paid $73.3 million to buy a 75 percent interest in the Fairmont Sonoma Mission Inn & Spa, the first San Francisco Bay Area transaction for the real estate investment trust.[contextly_sidebar id=”42f3cd56de766e6212e538e7d088ccb0″]Toronto-based Fairmont Hotels & Resorts, the seller, retains a 25 percent interest in the 226-room resort at 100 Boyes Blvd. in Sonoma. Fairmont paid $87 million for a 100 percent stake in the property last year, according to PKF Consulting. The latest purchase price suggests $10 million in appreciation in the property’s value since that sale.
The inn is most noted for the natural mineral hot springs that fill a 40,000-square-foot spa. The site has been the location of a hotel on and off since the late 1800s. The current hotel was built in 1927 and sits on 13 acres. The resort was renovated and expanded from 1984 to 2000.
“We are excited about owning a majority interest in the Sonoma property. It is an iconic property. It is located in a market that has very high barriers to entry. It would be next-to-impossible to get a property of this size and quality constructed in the area and attract the same kinds of guests,” said Michael Medzigian, Carey Watermark chief executive officer in an interview with The Registry.
“We think the Fairmont is a very strong hotel brand,” he said.
The property’s main guests are leisure travelers drawn to the area for its nationally and internationally known wine production. Fairmont will continue to manage the property on a long-term basis.
Medzigian hopes that the resort won’t be the company’s last San Francisco Bay Area property. “We would like to own more in the region,” he said.
Carey Watermark has invested in 17 resorts and urban hotels nationwide since it was formed in 2010. It owns about half the properties itself and the other half in joint ventures similar to its arrangement on the Mission Inn. Its portfolio totaled 2,515 rooms at the end of April, according to the company’s Web site.
Some of a scheduled $10.7 million renovation has been completed. Future improvements include work on the mineral-water spa.
Medzigian declined to disclose the hotel’s current average annual occupancy, what amount of the renovation his company would fund or to comment on the sales price.
Carey Watermark is a publicly registered non-traded REIT that invests primarily in lodging and lodging-related industries. The company expects to make a public filing with additional details about the transaction in the next 10 days, the chief executive said.