Rancho Valencia sold for more than $15 million
By Lori Weisberg, UNION-TRIBUNE STAFF WRITER
Thursday, May 6, 2010 at 5:57 p.m.Rancho Valencia, the 55-room hotel and spa in Rancho Santa Fe, has been sold.Rancho Valencia, the luxury Spanish- and Mediterranean-style resort nestled in Rancho Santa Fe, has been sold for more than $15 million, substantially less than the property’s estimated $40 million value just two years ago when it was previously up for sale.
The transaction, completed Friday, will effectively transfer ownership of the 55-room hotel and spa from one prominent San Diego family to another.
An investment group led by Jeff Jacobs, son of Qualcomm founder Irwin Jacobs, purchased the more than 40-acre property in a deal brokered by Chris Collins, son of Harry Collins, who developed the resort more than two decades ago. The Collins family still owns the more well-known La Valencia Hotel in La Jolla.
Also part of the new ownership group are San Diego real estate developer Jeffrey Essakow and Doug Carlson, former chief financial officer of Aspen Skiing Co. and currently chief executive officer of Fiji Water. While the sale to the investment group had been in the works for the last six months, Collins acknowledged there were a number of other suitors.
“This group was one of the original groups that wanted to purchase Rancho Valencia two years ago, so we decided to go back and talk with them again,” said Collins, president of San Diego-based Southwind Property Co. “But there were a number of people who submitted offers, and the key was finding the right group to foster this into the future.”
Figuring into the decision to sell, though, was a polo accident Harry Collins had a few years ago that has not allowed him to be “intimately involved in all the details” of overseeing the project, which has zoning approval for additional rooms, said Chris Collins. Since opening in 1989, the resort has consistently attracted high-end travelers, including well-known entertainers, politicians and business leaders.
Besides the resort’s suites, spa and 18 tennis courts, there are a dozen villas that have been divided into nearly 100 fractional ownerships; not all of those have been sold.
“This is a complicated project, and it took sophisticated investors to put it together,” said Chris Collins. “It’s not a normal hotel, with such big grounds and a spa with pools and hot and cold plunges, and being a luxury hotel in the middle of a high-end residential neighborhood makes it complicated.
“The goal has been to finish the development of Rancho Valencia in a fashion similar to what the Collinses started, and we think the new owners will be great stewards of the land in the future. Ultimately, they’ll probably build additional rooms.”
While the resort’s value has plunged in the last two years, it remains a coveted acquisition, given its location and amenities, said hotel analyst Alan Reay of Atlas Hospitality Group. Its purchase price of nearly $300,000 per room, he said, is in line with recent sales of comparable luxury properties.
Hotel values have dropped 50 percent in the last two years, and for luxury properties, the fall has been even greater, added Reay.
“Rancho Valencia has a great reputation in an irreplaceable location,” he said. “These are the types of hotel assets that don’t normally become available for sale.
“For people in San Diego who know this area, it would definitely be classified as a trophy property and as depressed as the hotel business is, there’s tremendous interest in these kinds of trophy properties. Any quality in this market is attracting a lot of buying interest.”
