CWI Buys JV Stake in Fairmont Sonoma Mission Inn in $97M Deal

Carey Watermark Investors has purchased a 75 percent joint venture interest in the 226-room luxury resort from Fairmont Hotels & Resorts in a transaction valued at an aggregate $97 million.

W. P. CAREY INC. SONOMA RESORTA new name has been added to the ownership documents at the Fairmont Sonoma Mission Inn & Spa in Sonoma, Calif., smack in the middle of Wine Country. Carey Watermark Investors Inc. has purchased a 75 percent joint venture interest in the 226-room luxury resort from Fairmont Hotels & Resorts in a transaction valued at an aggregate $97 million.

Sited on 13 acres in Boyes Hot Springs, roughly 40 miles outside of San Francisco, the Mission Inn first welcomed guests in 1927 and today, it carries the distinction of being one of the only upscale spa resorts in the country with its own thermal mineral water source. The property also boasts a 40,000-square-foot spa and 12,000 square feet of meeting space.

CWI’s investment in the asset totaled $73.3 million, including its portion of the $44 million of debt that financed the joint venture endeavor.

The transaction comes just over one year after Fairmont acquired the remaining stake in the Mission Inn from Crescent Real Estate Equities L.P.  Fairmont has been onsite at the lodging destination since 2002, when the company acquired a 19.9 percent position in the property and took over management.

And now, as co-owner once again, Fairmont will continue in its role as manager of the Mission Inn under a long-term agreement with CWI. Together, Fairmont and CWI will conclude the first phase of a 10.7 million renovation, and initiate additional upgrades over the next two years. The property will be even better positioned to capitalize on an improving market. In Sonoma County, the average hotel occupancy for the first four months of 2013, jumped to 64.2 percent from 59.3 percent during the same period in 2012, according to a report by PKF Consulting USA.

“Given the strong market and the high barriers to entry, we believe that this investment is consistent with our strategy of sourcing and investing in opportunities where we can joint venture with owners to maximize the current value of the asset, create a solid financial platform for future operations and achieve attractive risk-adjusted returns for our investors,” Michael Medzigian, CEO of CWI, said in a prepared statement.

CWI, however, has nothing against sole-ownership pursuits. The firm kicked off 2013 with the $104 million purchase of five Hampton Inn & Suites and Hilton Garden Inn hotels located in five southern states. And more recently, CWI acquired the 226-room Holiday Inn Manhattan 6th Avenue hotel tower in a transaction valued at $121.4 million.