Finance & DevelopmentFinanceNapa Valley Hotels Receive Preferred Equity Investment

Napa Valley Hotels Receive Preferred Equity Investment

SAN FRANCISCO—Driftwood Capital, a vertically integrated commercial real estate investment, development, and lending platform specializing in hospitality, announces that it has provided $12.79 million in preferred equity for a two-hotel portfolio located in the Napa Valley region of Northern California. The investment, which comes behind $41.3 million in senior construction debt, is for the new 135-key Cambria Hotel Sonoma Wine Country in Rohnert Park and the 90-key Cambria Hotel Napa Valley in Napa, which is scheduled to open this summer.

The sponsors have a total of five Cambria developments in various stages of delivery and development. Driftwood’s investment has a three-year initial term with a one-year extension option.

“The COVID-19 lockdown that began in March 2020 impacted the construction schedule for both hotels,” said David Steiner, Driftwood’s managing director of capital markets. “Although construction resumed in June, the sponsor sought an injection of capital to help cover cost overruns and complete construction, while also providing some additional runway for stabilization of both properties.”

Driftwood’s lending fund originates mezzanine loans and preferred equity investments in the $5 to $75 million range and then, post-closing, syndicates participation in such opportunities to accredited investors. The fund has placed more than $40 million of capital in hotel mezzanine loans and preferred equity investments in 2021.

Located in Sonoma Wine Country, the 135-key Cambria Sonoma opened in August of 2020. It features Sam & Mary’s Restaurant & Bar, 1,800 square feet of meeting space, an outdoor heated pool, and an outdoor patio with fire pits. The property is situated near regional corporate offices, vineyards, hot springs, golf courses, and restaurants, as well as popular attractions including the Green Music Center, Crane Creek Regional Park, and the Graton Casino.

The 90-key Cambria Napa is projected to open in July 2021. It will feature a full-service restaurant and bar, 1,000 square feet of meeting space, a fitness center, and an outdoor heated whirlpool. It is centrally located near regional attractions, including the Napa Wine Train, Oxbow Market, and Silverado Trail. The Napa County Airport is also located just 10 minutes away.

Driftwood Capital’s syndication model allows accredited investors to co-invest in institutional-quality hotel assets or capital solutions at an attractive basis. The company has raised more than $250 million for its three separate development, acquisitions, and lending funds. Since 2015, the principals of Driftwood Capital have placed more than $700 million in capital with their investor network of family offices, individuals, and others, representing a portfolio of more than $1 billion in hospitality assets. Among these assets are the Marriott Mission Valley San Diego, the Sheraton Park City, and the Margaritaville Lake of the Ozarks, as well as the newly constructed Canopy by Hilton West Palm Beach, Canopy by Hilton Tempe, and Tru by Hilton/Home2 Suites by Hilton Ft. Lauderdale Downtown.