Dubai Firm Take Half of Mexican Luxury Resort for $315M
- Feb 25, 2008
One&Only Palmilla, an upper-upscale resort in Los Cabos, Mexico, will soon get a new co-owner, courtesy of a transaction valued at $315 million. A group of funds affiliated with the New York City-based Goldman Sachs & Co.-managed Whitehall Street Real Estate Funds has agreed to sell its 50 percent stake in the property to Dubai’s Nakheel Hotels. A beachfront fixture since 1956, One&Only Palmilla sits at the Southern tip of the Baja Peninsula near the San Jose del Cabo International Airport. In addition to its 172 guestrooms, the property features a 22,000-square-foot spa, a 7,000-square-foot conference center, a 27-hole golf course, restaurants and a wedding chapel. The property offered just 115 rooms before it underwent a $102 million upgrade in 2004 that expanded the number of guestrooms, and added many of the aforementioned offerings. The resort operates under the management of Kerzner International Holdings Ltd. which, as owner of the other 50 percent of the property, will become the joint venture partner of Nakheel. Kerzner purchased its stake in One&Only Palmilla in 2002 for nearly $41 million, and has a longstanding relationship with Nakheel. Approximately 30 percent of Kerzner is owned by Nakheel, and the two companies are partners in a handful of joint venture endeavors. For Nakheel, the partial acquisition of One&Only Palmilla paves the way for the company’s entrée into Latin America’s lodging market. Mexico is particularly hot. As per real estate services firm Jones Lang LaSalle’s research initiative with Mexico’s National Trust for Tourism Development, foreign investment in development and acquisitions in the country skyrocketed by 941 percent between 2000 and 2006. Kerzner is an international developer and operator of destination resorts, luxury hotels and gaming properties, as well as the owner of the One&Only brand. Nakheel Hotels was launched in November 2007 as the new incarnation of the 2006-established Istithmar Hotels following Dubai World’s consolidation of its hotel business under one banner. The company’s enterprise value of investments to date exceeds $3 billion.