Napa Valley Register
05/08/16

Yountville Hotels, V Marketplace Sell for Record $148 Million
By Jennifer Huffman

http://napavalleyregister.com/business/yountville-hotels-v-marketplace-sell-for-record-million/article_d75c669e-c26d-5119-ba80-18f090c193c1.html
In what could be the largest private sale of a Napa County lodging and shopping property, the Vintage Estate of Yountville has sold for $148 million.

On April 26, Brookfield Hotel Properties of Maryland bought the 22-acre Napa Valley property from the Egan, Ghilotti and Sandbach families.

“We are thrilled to acquire this iconic property and are excited to be part of this community,” said Shai Zelering, managing director, operations and asset management for Brookfield Hotel Properties.

The company declined to comment on the sale price, which was calculated by the Napa County Assessor’s office from deed records.

The mixed-use estate includes the Vintage Inn and the Villagio Inn & Spa, two restaurants, a spa, meeting space, a three-acre vineyard and more than 43,000 square feet of retail and office space in the V Marketplace.

Brookfield is still in the early stages of plans for the property, “but we are committed to maintaining the Vintage Estate’s reputation as a favorite place of both residents and visitors to Napa,” Zelering said.

The property’s name will remain the Vintage Estate, and it will remain open and fully operational throughout the transition, said a news release.

Other Napa County hotel property sales have approached or exceeded $100 million mark in recent years. The Bardessono hotel, also in Yountville, sold for $85 million, the Carneros Inn sold for $62 million, the Harvest Inn in St. Helena for $55 million, Andaz Napa for $72 million and Silverado Resort for approximately $110 million.

Alan Reay, president of Atlas Hospitality, which specializes in the sale of California hotels, called the Vintage Estate a “trophy” in an “A+” location. “It has 22 acres of land, which is virtually impossible to find,” he noted.

However, even though $148 million sounds like a lot, “I think it’s working out to be a good investment for the buyer at that price,” Reay said.

California hotel sales are down 35 percent in the first quarter of 2016, he said.

“The market is starting to flatten out in terms of revenue increases and lenders are pulling back from hotel loans, or making them at much higher rates. It’s a completely different market today than six months ago. “

Reay explained that in 2015 financing for hotels was readily available and Real Estate Investment Trusts (REITs) “were very active buyers.”

But in the beginning of 2016, “we had a decline in the stock market and hotel REITs were hit very, very hard. Those companies were no longer in the market to buy.” Financing became more difficult.

When Vintage Estate came on the market in 2015, higher prices might have been considered, but then some bidders likely dropped out because of financing, which opened an opportunity for Brookfield, said Reay.

According to the Assessor’s office, the land and structures were assessed at $45 million before the sale, which comes to $500,587 in property taxes per year. With a reported purchase price of $148 million, the estimated future property tax bill could be three times that amount.

Mark McDermott, senior vice president at CBRE Hotels, was one of the listing agents for the property.

“While the Bardessono sale last year was notable for its price per key, the Vintage Estate sale is notable because of the size of the property, and it continues to solidify Napa Valley as an investment grade location for both national and international capital,” he said.

“We’re seeing premier hospitality assets like this trade at investment metrics that were previously reserved for gateway urban destinations like San Francisco and New York.

“In economic terms, the town and the county should benefit significantly from the new owner’s plan to invest in the property and elevate its performance,” said McDermott.

“When you have a change in ownership of a longtime, family-owned property that plays such a significant role in our small town like the Vintage Estate has, initially it’s a bit concerning,” said John Dunbar, Yountville mayor. However, talking with the new owners’ leadership team, “I’m confident in their commitment to maintaining and even elevating the quality of experience and service.”

“The sizable investment displays a strong desire to keep Vintage Estate a premiere global destination property and a major asset to Yountville,” Dunbar said.

“This sale reinforces the findings in Visit California’s 2015 Economic Impact report released this (past) week touting tourism as a significant and growing piece of the Bay Area’s economy,” said Clay Gregory, president and CEO of Visit Napa Valley.

According to that report, Napa Valley visitors spent $355 million on accommodations in 2015, the highest percentage of all spending and an increase of 15 percent over 2014.

“It also shows the very positive state of the valley and its image in the world of hospitality,” said Gregory.