The house the valley was born in.

Between 1918 and 1964, a great many of the people who went on to build this valley were born inside a stone house on Myrtle Street in Calistoga.

It was the Calistoga Hospital then. Before that it was a private residence, commissioned in 1886 by James H. Francis, a merchant who owned a store on the corner, several ranches, and a silver mine north of town. He hired the architect John Sexton and built in the French Second Empire style, in stone quarried locally, twenty-six feet to the top of the mansard roof. It remains the only stone building in Napa County in authentic French Second Empire. It went onto the National Register in 1979.

The state closed the hospital in 1964, and the building stood empty for fifty-two years. By the winter of 2015 it was reportedly about six weeks from demolition when Dina and Richard Dwyer began work. Their restoration took four years. The Francis House opened as a seven-room inn in October 2018.

In 2024 I represented the buyer. The sale was off-market and closed at $9,600,000.

The number does not come from the operating statement

County records show 4,520 square feet, seven rooms across three stories, on just under half an acre.

That works out to roughly $1.37 million per key.

No seven-room inn in Calistoga produces revenue that supports $1.37 million a key. Run the property as a business and underwrite it the way hotels are underwritten, on rooms and rate and occupancy against a cap rate, and you arrive at a number well below what this transaction closed at. The income approach was never going to get there.

Which means the building and the restoration closed the gap, and that is the part worth explaining, because it is where most advice in this category goes wrong.

When a property has no comparable, price is discovered with meticulous analysis and an understanding of the concept of irreplaceability. There was no second stone Second Empire building in the county to measure against, no recent trade to point at, no per-key figure in the market that meant anything here. What a buyer is actually deciding is whether the thing in front of them is replaceable. This one was not, by any amount of money, on any timeline. You cannot commission an 1886 building.

My client is a boutique hospitality company operating in Napa Valley. I have advised them since 2023, and they had been ready for a legacy asset for some time. The work was not persuading them the property was good. The work was helping them understand what they were paying for, so the number stopped looking like a premium and started looking like the price of a category with one member.

The challenge

The sellers had rescued this building. They had spent four years on it and lived in it afterward. What they were handing over was not an asset on a schedule, it was something they had made, and the escrow was long.

Most of my work across those months was keeping both sides aligned at every step. Not negotiating against each other, aligned. A seller in that position is not primarily optimizing for terms. They are deciding whether they can live with who gets it next, and they will find reasons to hesitate if that question goes unanswered. A buyer who does not understand that reads the hesitation as leverage and pushes, which is precisely how these transactions die.

The job was to make sure neither side ever had to guess what the other was thinking. That is unglamorous work and it is a good part of what I do.

The market answered afterward

I stayed on through the transition and worked with the new ownership on positioning the property.

The Francis House has since received a MICHELIN Key, the first awarded in Calistoga.

I would not claim credit for that. The building and the team earned it, and the restoration earned it before I was ever involved. But the Key arriving after the sale is the closest thing to an external verdict that a transaction like this ever gets. The premium was an accurate reading of what the property was, made before there was any public marker confirming it.

That is the whole argument for having an advisor on a building with no comparable. Not access, though the sale never reached the open market. Not negotiation. Judgment about what a thing is worth when the usual instruments have nothing to say.

Most hospitality properties are priced by their income. A few are priced by what they are. Knowing which one is in front of you is the entire job.

— Federico