South Korea's Mirae buys Fairmont San Francisco

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.

Virtual Roundtable

Post COVID-19: The New Guest Experience

Join Hotel Management’s Elaine Simon for our latest roundtable—Post COVID-19: The New Guest Experience. The experts on the panel will share how to inspire guest confidence that hotels are safe and clean and how to win back guest business.

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.

Suggested Articles

The REIT said that it does not expect to see a meaningful increase in demand for its portfolio until there are COVID-19 medical solutions in place.

The LW Hospitality Advisors "Q2 2020 Select Major U.S. Hotel Sales Survey" highlights six transactions across the country.

IHG has until Aug. 24 to make its priority return payment plus accrued interest to avoid termination of the agreements with Service Properties Trust.