South Korea's Mirae buys Fairmont San Francisco

(building)

The Fairmont San Francisco Hotel has been sold to South Korea financial services company Mirae Asset Global Investments for $450 million, around $250 million more than what the sellers Oaktree Capital Management and Woodridge Capital Partners bought the hotel for back in 2012.

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

Fairmont Hotels & Resorts, itself in rumors of a sale, will continue to operate the hotel, which opened in 1907, under a long term management agreement.

As the Business Times points out, the $450-million purchase equates to $760,000 per key for the 592-room hotel. While not the priciest hotel transaction in San Francisco of late, it follows a pattern of record hotel transactions. The former Mandarin Oriental San Francisco recently sold to Loews Corp.for a reported $1 million per room, and Oracle Corp. co-founder Larry Ellison recently paid $71.6 million, or $832,500 per room, on Palo Alto's Epiphany Hotel.

San Francisco has a dearth of new supply, so investors get into the market via acquisition. And because hotels can cost more than $1 million per room to build, as the Business Times writes, real estate companies are "willing to shell out more to buy an existing property."

“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,” said Rosenfeld.