Sonoma Valley hotel is part of Brookfield’s $3.8 billion play for Watermark Lodging portfolio

Fairmont Sonoma Mission Inn & Spa is one of 25 hotels in 14 states that’s part of a big real estate investment trust acquisition.

The 226-room resort at 100 Boyes Blvd. in Sonoma is wholly owned by Watermark Lodging Trust Inc., which on May 6 announced a deal to be acquired by private real estate funds overseen by Brookfield Asset Management, one of the world’s largest such firms.

Under the agreement, Watermark, whose Bay Area holdings are The Ritz-Carlton San Francisco and San Jose Marriott, would sell its shares in an all-cash transaction valued at $3.8 billion. The deal is scheduled to close in the fourth quarter.

The Sonoma hotel last changed hands in mid-2013, when Fairmont sold a three-quarter stake in the property for $73.3 million to what was then called Carey Watermark Investors Inc. .

The hotel was built in 1927 on the 13-acre site of the former Boyes Hot Springs Hotel, which was developed in 1895. The resort has been renovated and expanded repeatedly, starting in 1985 and continuing over the past two decades.

“Hotels and resorts of this scale and quality are difficult to replicate,” said Lowell Baron, managing partner and chief investment officer in Brookfield's Real Estate Group, in a news release. “This portfolio is well positioned given its concentration in high barrier to entry coastal destinations, gateway cities and the sunbelt.”

Chicago-based Brookfield is the world’s 18th largest asset manager, according to Sovereign Wealth Fund Institute. The company in the first quarter reported about $725 billion in assets under management in real estate, infrastructure, renewable power and transition, and private-equity and credit ventures.

Brookfield currently oversees a real estate portfolio valued at $256 billion, including 16 full-service and 140 extended-stay hotels, totaling around 16,000 rooms, according to its website.

Morgan Stanley & Co. was Watermark’s exclusive financial adviser in the Brookfield deal. Hodges Ward Elliott is Watermark’s real estate adviser, and Clifford Chance US and Paul Hastings are legal counsel. Fried Frank Harris Shriver & Jacobson is legal counsel to Brookfield. Citigroup, Bank of America, JP Morgan and Wells Fargo are financial advisers and are providing financing for the transaction.

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