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Sunday, Oct 2, 2022

Turning Wireless Into Wine

Until about two months ago, Newport Beach’s Gary Jabara was the largest private owner of wireless infrastructure in the U.S.

By next month, the prominent Orange County telecom exec will be the largest owner of commercial real estate in the chic Napa Valley city of Yountville, the Business Journal has learned.

Jabara is under contract to buy The Estate Yountville, a 22-acre “village-within-a-village” collection of upscale hotels, restaurants, wedding facilities, shops, meeting space, a vineyard and other facilities in the heart of wine country.

The Estate is the largest commercial property in the city of Yountville, which is just off the St. Helena Highway, about 55 miles north of San Francisco.

“It’s the gem of Napa Valley,” said Jabara of the impending purchase, which industry sources not involved in the deal estimate could approach $300 million.

He describes the Yountville as the “Beverly Hills of wine country,” given its collection of high-end restaurants, stores and resorts, and notes the area is closer to San Francisco and Silicon Valley than some other notable destinations in the vicinity like St. Helena and Calistoga.

Yountville can claim to be the culinary capital of Napa Valley, with Thomas Keller’s famed French Laundry restaurant located a short walk from The Estate; it’s one of several eateries that Keller operates in the city, which boasts several other notable restaurants and chefs as well.

The city—running about 1.5 square miles and counting a population of around 3,300—boasts more Michelin stars per capita than any other place in North America, according to news reports.

Hefty Price Expected

The Estate is anchored by two luxury hotels: Hotel Villagio, a 112-room property with 22 suites; and Vintage House, an 80-room hotel.

Both were revamped about three years ago, and currently count nightly rates starting around $900, according to the property’s website.

Jabara, who has long counted an extensive real estate portfolio in addition to his telecom holdings, didn’t comment on how much he’s paying for the entirety of The Estate, citing a non-disclosure agreement.

A price in the $270 million to $300 million range is possible, given recent pricing for luxury hotels in the Napa Valley region, said Alan Reay, president of Irvine-based hotel brokerage Atlas Hospitality.

That would imply a price in the $1.4 million to nearly $1.6 million a key range.

If the deal hits that mark, it will be the largest hotel transaction in California this year on a cumulative basis, according to Atlas’ data.

Jabara is buying The Estate from a unit of Brookfield Hotel Properties, which paid a reported $148 million for the site, then called the Vintage Estate, a little more than five years ago. Brookfield subsequently put tens of millions more into revamping the property. “It’s essentially brand new,” according to Jabara.

The upgrades include new rooms, lobby, pool area and a new, five-bedroom, 3,600-square-foot private villa that goes for about $15,000 a night.

Jabara said he had a leg up on other potential buyers on account of being an all-cash buyer.

“Hotel financing is hard to get right now” amid ongoing pandemic concerns, Jabara said.

$1.7B Wireless Sale

News of Jabara’s impending real estate purchase comes a little more than a month after Newport Beach’s Mobilitie, the telecommunications infrastructure company he founded and chaired, completed its sale to Australia’s BAI Communications.

The Newport Beach company, whose infrastructure offerings enable wireless coverage in a variety of settings, ranging from stadiums to casinos, sold for just under $1.7 billion, investment banking sources familiar with the deal told the Business Journal in June, when news of the deal was first announced.

The sale closed around the start of October. Mobilitie, which counts about 200 local employees, said last month that it would continue to run its operations from its local office.

Jabara left Mobilitie after the sale. He hasn’t commented on the final terms of the sale, which comprised all his wireless assets.

He’s still involved in OC’s tech scene. He serves as chairman of Newport Beach’s ioXt Alliance, which he founded three years ago.

The alliance, backed by several large tech companies, is intended to handle the rapidly increasing demand for Internet of Things device certification that meets security requirements across a variety of product categories.

“It’ll be bigger than Mobilitie in the next five years,” he said last week of ioXt.

Year-End Goal

As a result of the Mobilitie sale, Jabara said he’s looking, by year’s end, to place upwards of $1 billion into his commercial real estate portfolio, which he operates under the Boardwalk Investments Group name.

The Yountville deal is the first he’s reported to have inked as part of that shopping spree.

“It’s the first of many,” he said of the impending acquisition.

Jabara said he’s also looking at some properties in the San Diego area, including a grocery-anchored shopping center and a larger-sized apartment complex. Those deals are expected to run “several hundred million dollars,” and should close before the end of the year, he said.

In recent years, he’s made several notable retail-focused buys along Coast Highway in OC, including the mixed-used Strand complex in Huntington Beach, and Laguna Beach’s Aliso Creek Shopping Center, which is across the street from the Montage resort.

He said he’s not under contract to buy any additional properties in OC as of now.

In terms of an acquisition focus, “everything we own is experiential,” said Jabara, who noted his retail centers are primarily grocery-anchored—no power centers—and largely immune from competition from the likes of Amazon.

Napa Push

Jabara has familiarity with Yountville. Two years ago, he paid a reported $23.5 million for a five-building complex along the city’s main retail area that houses a high-end home furnishings showroom for RH (previously known as Restoration Hardware), a historic masonry building used as a wine vault and tasting area, and an affiliated restaurant.

“I’m very bullish on Napa Valley,” he said, noting that it’s “nearly impossible to get anything else permitted” in Yountville.

His deal will mark the third large hospitality acquisition in Napa Valley this year by an OC-based buyer.

Irvine’s Sunstone Hotel Investors Inc. (NYSE: SHO) in April paid a reported $265 million for the 130-room Montage Healdsburg, which is about 40 miles northwest of Yountville in Sonoma County.

It’s the most expensive single-property hotel sale in the state thus far in 2021, by total price, according to Atlas Hospitality.

That transaction worked out to a price of a little more than $2 million a key and is the fourth-priciest hotel deal ever seen in California by that measurement, according to Atlas.

Sunstone announced earlier this month that it was under contract to buy The Four Seasons Resort and Residences Napa Valley in Calistoga, an 85-room resort that opened a month ago near Mount Saint Helena.

Sunstone said it will pay about $177.5 million for the hotel; at nearly $2.1 million per key, it’s set to be the third-highest valued hotel deal ever seen in California, according to Atlas’ data.

The Four Seasons is about a 20-mile drive north from Yountville. The new resort is “bringing some cache” to the valley, Jabara said.

Sunstone had been shedding assets in recent years, building a war chest for a long-planned acquisition push. The Napa Valley buys are its first in several years. 

Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.

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