A New York real estate investment trust has acquired a majority stake in the Fairmont Sonoma Mission Inn & Spa in a $73.3 million deal announced Thursday.
Carey Watermark Investors Inc. purchased a 75 percent stake in the luxury Sonoma Valley resort, the county's top-grossing hotel.
Fairmont Hotels & Resorts, which owned the hotel, will retain a 25 percent stake in the property and continue to operate the resort under a long-term management agreement.
The deal, which was financed with $44 million in debt, values the resort at $97.1 million.
"From a guest's perspective, and even from a management perspective at the hotel, nothing has really changed," hotel spokeswoman Michelle Heston said.
Fairmont is nearly finished with the first phase of a $10.7 million renovation of the 226-room property, including the updating of all Heritage Rooms and a complete redesign of the hotel's lobby and restaurant, Sant? Additional work is planned over the next two years, including upgrading the spa.
"The completion of the hotel's renovations will enhance the resort, making it among the best luxury properties in the Sonoma/Napa market," CWI chief executive Michael Medzigian said in a statement.
The four-star resort is one of the largest employers in Sonoma Valley, with about 500 workers.
The hotel was built in 1927 atop geothermal springs on the site of the former Boyes Hot Springs Hotel, which was developed in 1895. The inn was a U.S. Navy rehabilitation facility during World War II and later served as a training site for sports teams.
The resort was renovated and expanded from 1984 to 2000. Today, room rates range from about $280 to more than $1,000 per night.
It fell into foreclosure in 2011 when Crescent Real Estate Equities, a Texas-based REIT that owned 80 percent of the resort, defaulted on a $55 million loan. Fairmont, which owned 20 percent of the resort, acquired full ownership in 2012.
"We are pleased to be teaming up with CWI and see this as an exciting opportunity to work with a well-respected investor that has extensive experience in the lodging industry," Fairmont president Jennifer Fox said in a statement. "The Fairmont Sonoma Mission Inn & Spa is a remarkable asset and we are convinced there are solid growth opportunities given the hotel's renovation plans and Fairmont's strong brand presence in the California market."
Toronto-based Fairmont Hotels & Resorts operates more than 60 luxury hotels around the globe. For several years, the company has been getting out of the business of owning the properties to focus on its long-term management contracts, Heston said.
Its decision to purchase Sonoma Mission Inn in 2012 was a special situation, she said. The company viewed it as a short-term opportunity to invest in an iconic property before putting it back on the market, she said.
Carey Watermark Investors is a publicly registered non-traded real estate investment trust that invests primarily in the lodging sector. It targets hotels with "broken capital structures," property owners who need money and undervalued assets, according to its website.