Napa Valley Hotel Sells for $1.2M per Key

Ashford intends to finance the purchase with about $50 million of non-recourse mortgage debt.

By Scott Baltic, Contributing Editor

Hotel Yountville
Hotel Yountville

Yountville, Calif.—Ashford Hospitality Prime Inc., of Dallas, has entered into a definitive agreement to buy the 80-room Hotel Yountville in Yountville for $96.5 million, or $1.2 million per key.

Yountville is about 60 miles north of San Francisco and is known as the “Culinary Capital of the Napa Valley,” with its restaurants reportedly earning more Michelin stars per capita than any other place in North America.

The Hotel Yountville was built in 1998 and in 2011 underwent an expansion and renovation that upgraded all existing guest rooms and added 29 more, as well as a restaurant, spa, meeting and event space, an outdoor pool, and lounge patio.

Its amenities include private patios/balconies, the Hopper Creek Kitchen restaurant and bar, complimentary wine tastings, an on-site spa, about 4,400 square feet of indoor and outdoor meeting space, a resort-style outdoor heated pool, and complimentary bicycles for guest use.

The North Bay Business Journal reported that the sellers were George Altamura, a Napa Valley developer and investor, and partners that include The Doctors Co., a large physician-owned medical malpractice insurer based in Napa.

Ashford intends to finance the purchase with about $50 million of non-recourse mortgage debt. The transaction is expected to close within 60 days. Management of the hotel will be handled by Remington Lodging.

The purchase price reportedly represents a trailing 12-month cap rate of 6.2 percent on hotel NOI of $5.9 million and a trailing 12-month 14.6x hotel EBITDA multiple, according to preliminary estimates based on unaudited operating financial data provided by the sellers. Based on the same data, on a trailing 12-month basis, the hotel achieved RevPAR of $469.12, with 87.8 percent occupancy and an ADR of $534.30.

The hotel’s acquisition “fits perfectly with Prime’s strategy of owning luxury hotels and resorts,” Richard Stockton, Ashford Prime’s CEO, said in a prepared statement. “This transaction presented a great opportunity for us given the quality of this asset and its unique location in an attractive market in the Napa Valley with high barriers to entry.”

Stockton added that the company expects to improve the hotel’s performance, “given the operating synergies with our nearby Bardessono property that we acquired in 2015.”

The 62-room Bardessono Hotel & Spa, also in Yountville, is barely half a mile from the Hotel Yountville and is also managed by Remington. Ashford paid $85 million ($1.37 million per key) for the property, without the underlying land.

Ashford can easily expect some synergies from owning both properties, especially because Yountville is very compact and has essentially just one main street, Suzanne Mellen, a senior managing director with the San Francisco office of HVS, told Commercial Property Executive.

Most hotels in the Napa Valley are small and boutiquey, with 100 or fewer rooms, she explained. Hotels in the region generally tend to command high room rates, and Yountville especially enjoys high occupancies, so those factors are presumably what drove the high price per key, she added.

The overall Napa Valley market totals about 4,800 rooms, about half of which are in the upper upscale segment and get an average room rate of about $400, with the average occupancy about 71 percent, according to Mellen. Based on the barriers to entry, she guesses that Ashford will indeed be able to nudge the Hotel Yountville’s average room rate even higher.

Images courtesy of Hotel Yountville

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