Hall Financial Invests In Napa Hotel Development With Its Eye On Future Hotel Deals

NAPA, CA— Hall Financial Group is bullish on the Napa region and the hospitality sector, having provided financing for two hotels in the area in the past six months. The more recent of the two deals is a $10.95 million first mortgage construction loan on the River Terrace Inn. The property is an upscale106-unit boutique hotel to be built right on the Napa River. Most of the units onsite will be oversized and include balconies that overlook the river. The new hotel plans to open its doors in September 2003. Development plans also call for a free-standing restaurant to be built on a parcel of land adjacent to the River Terrace Inn. Combined, the hotel and restaurant feature 300 feet of frontage on the river, and are within walking distance from The Wine Train Depot and Copia: The American Center for Food, Wine and the Arts. Gustin Property Group is the owner/developer of the project and Driftwood Hospitality is the management company hired to operate the hotel. As to why Hall Financial decided to get involved in this development, the company saw upward potential in the area. “We’re very bullish on Napa,” Michael Jaynes, senior vp of Hall Financial, told HOTELBUSINESS®. “The Town of Napa is in the process of developing a river walkway that will run between the hotel and the river. So, the guests will be able to walk and bike on the walkway, which leads directly to Downtown Napa. “We also have a big presence in Napa already because our chairman has a vineyard there and the company is in the process of purchasing addition vineyard land there right now,” he said. “We also invested in the Hilton Garden Inn project in Napa before we became involved in this project.” Specifically, the company provided $2.25 million in preferred equity to Presidio Hotel Napa, LLC to build the 80-room Hilton Garden Inn in Napa, which opened in September 2002. The River Terrace Inn will cost $16 million in total to build, of which Hall Financial has fronted 68%. “We really heard about this project about eight months ago,” said Jaynes. “The deal itself was smooth for us because the developer/owner was fully entitled and was in the tale end of the permit process. The big issue in Napa is getting the entitlement, which this developer/owner had in hand before we even started to look at the project.” Going forward the company plans to continue investing in Napa and the hotel market at large. “We see RevPARs remaining flat throughout the year,” related Jaynes. “We’re focusing on a turnaround in 2004. “As a result, we see hotels as a very opportunistic product right now, which is why we’ve chosen to get involved in the business,” he said. “Another reason we’ve targeted this product type is because it’s product starved so we don’t have as much competition. In the end, as the economy gets better we expect more competition so we’re looking to invest and make our move now.”