Exclusive: Fairmont San Francisco sold to Korean investor for $450 million

The owners of the Fairmont San Francisco have sold the landmark Nob Hill hotel, the latest in a series of high-priced hotel transactions in the city.

As rumored in October, a Seoul, South Korea-based financial services concern,Mirae Global Investments, has purchased the hotel for $450 million. The sellers are Woodridge Capital Partners LLC, and Oaktree Capital Management, which jointly purchased the hotel in 2012 for $200 million and put in $20 million worth of renovations.

“As a partnership, we believed this was the right time,” Woodridge Managing Partner Michael Rosenfeld told the Business Times. “We believe the hotel will be in good hands with Mirae, which is a long-term investor.”

Fairmont Hotels & Resorts will continue to operate the historic hotel under a long-term management agreement, according to Rosenfeld.

At $450 million, the price per room is $760,000 for the 592-room Fairmont. It's not the priciest hotel transaction of late, but it would follow a pattern of record hotel transactions. The former Mandarin Oriental San Francisco recently sold to Loews Corp.(NYSE: L) for a reported $1 million per room, and Oracle Corp. (NYSE: ORCL) co-founder Larry Ellison recently dropped $71.6 million, or $832,500 per room, on Palo Alto's Epiphany Hotel.

Experts say the high sale prices are due to a hot business travel and tourism market that is driving occupancy and room rates up. San Francisco welcomed 18 million visitors who spent $10.7 billion in the city in 2014, up 13.7 percent over 2013.

And because hotels can cost more than $1 million per room to build, real estate companies that want a piece of the market are willing to shell out more to buy an existing property. That's sparked a wave of high-value hotel transactions.

“The hotel market in San Francisco is the best in the country, and we believe there will be continued growth in that sector, due to all the continuing activity in the city (and) scarcity of supply for further hotel inventory,” Rosenfeld said. “And San Francisco is the best city in the world.”

The Fairmont San Francisco opened in 1907 and was designed by New York architectural firm McKim, Mead & White and Julia Morgan.

Woodridge Capital Partners also owns the Mark Hopkins Hotel and Stanford Court in San Francisco, and Rosenfeld said that while he was pleased with the sale of the Fairmont, “our heart will always be with the Fairmont.”

[ via BizJournal ]