Dallas investors buy Santa Fe’s crown jewel
Barry E. Hancock (left) and Philip Wise of Cienda Partners LP in Dallas led an investment group that includes a small cadre of prominent Texans who are buying La Fonda. ( Ron Baselice - Staff Photographer )
2:17 PM on Oct 18, 2014
Buying a national treasure isn't easy.
And when it's in Santa Fe, where history is revered more than money, it's especially difficult.
Folks in New Mexico's capital don't take kindly to "foreigners" messing with their culture. And there's nothing more centric to the local psyche than La Fonda on the Plaza.
Its site at the busiest corner of the historic plaza has been an inn of some sort for more than 400 years, dating to 1607, when the Spaniards established Santa Fe as a trading village. In the 1800s, it became the terminus of the legendary Santa Fe Trail. The current pueblo-style incarnation opened in 1922.
That's why it's so amazing that the sale of the famous hotel to an investment group in Dallas is being greeted with community relief instead of an uproar.
Philip Wise, 56, principal of Cienda Partners LP in Dallas, led an investment group that includes a small cadre of prominent Texans who are buying La Fonda from Corporación de la Fonda Inc., which is controlled by the heirs of former Dallasite Sam Ballen.
Cienda formed La Fonda Holdings LLC to acquire the hotel. Cienda owns half of it, and the other owners include Dallas philanthropist Caren Prothro, businesswoman Marilyn Augur and the Houston family of the late federal judge James Noel.
Wise’s ace in the hole was his sister, Jenny Wise Kimball, who is the chairwoman of Corporación de la Fonda. Kimball, 55, lives in Santa Fe and has been La Fonda’s attorney for more than 25 years. She has been board chairwoman of La Fonda since Ballen died in 2007, exactly a year and a day after the death of his wife, Ethel.
The Wise and Ballen families have been close since Sam and Ethel came to Dallas in 1949. The Ballens moved with their five daughters to Santa Fe in 1965, bought the hotel from the Atchison, Topeka & Santa Fe Railway three years later and changed its name from Harvey House to La Fonda.
Kimball, who is part of the new ownership, will continue to oversee operations.
“We have 60-plus shareholders, but the daughters own the majority of the shares,” said Kimball. “None of them live here or have business backgrounds. They wanted to carry on the legacy of family ownership. So I went to my brother and said, ‘I know where all the bones are buried. I’ve been running it for seven years. It’s a successful operation. And it would be a good thing to pass on family to family and carry on the traditions.’”
That’s why the folks in Santa Fe are cheering.
“I could not be more excited for the future of the historic La Fonda Hotel,” said Santa Fe Mayor Javier Gonzales. “Jenny has been a great steward at the property. She is active in the community and shares my desire to elevate Santa Fe on the global stage when it comes to arts and culture. Santa Fe is lucky to have both her and Philip.”
Historic, profitable
La Fonda, which is on the registry of Historic Hotels of America, employs 225, brings in about $20.5 million in annual revenue and is profitable, said Wise, who has been in the real estate business for more than 30 years.
The purchase price of the 180-room hotel was undisclosed. But recent comparable sales in the historic district, plus the added value of La Fonda’s retail space, would place it at $80 million, give or take.
Prothro is making an investment of the heart as much as one for wealth. She vividly remembers walking into La Fonda for the first time as a 10-year-old from Wichita Falls with her parents in 1953.
“It’s crystallized in my brain,” she said. “Going into the cantina with my mother and dad and seeing the [waitstaff] women with incredible long, black velveteen skirts with sequins on them and those great wonderful embroidered white blouses with puffed sleeves. I thought this was something magical.”
A couple of years ago, Prothro told her daughter and son-in-law that she was worried “that some outside group who didn’t have an appreciation for this iconic feature of downtown Santa Fe” would buy it and turn it into “I don’t know what.”
When her son-in-law told her that Wise and Kimball wanted to buy the hotel to protect its heritage and keep it from becoming part of a luxury chain, Prothro decided to join their quest.
“Jenny must have done a masterful job of earning the daughters’ regard and trust.” Prothro said. “She’s been able to give it an upgrade without destroying the original look, feel and historic essence of the place.”
Wise expects the deal to be completed in the next two weeks.
'Good stewards'
“It took us nearly three years of working with the [hotel] board to get them comfortable with us being the next-generation owners,” Wise said in his Travis Walk offices. “They could have hired a broker and tried to get maximum dollars for it. But they sold it to us without showing it to the market because they trusted us to be good stewards.”
All true, said Penina Ballen. “My father was quite the personality with very strong ideas. It was very important to him that La Fonda not become another Ritz Carlton or corporate chain. We felt the very same way.”
One of the family’s conditions for selling was that current management be allowed to stay and that seniority and staff benefits be continued.
“We wanted to maintain the character, historic integrity and the family feeling that exists among the employees, who have a tremendous longevity with the hotel,” Ballen said from her home in California.
For example, the head bellman retired three years ago at age 85 after more than 60 years on the job.
Ballen and her sisters wanted to be the ones to break the news to employees. They did so two weeks ago at an employee reception celebrating August as the hotel’s best month ever.
“We didn’t tell anybody before that. It was under wraps,” she said. “The general manager took an oath of confidentiality.”
Cienda specializes in acquiring unusual real estate. It recently purchased the Oak Farms Dairy property near downtown Dallas and plans to turn the 15.5 acres into a mixed-use development.
The private equity firm is already a mega-landowner in Santa Fe, having bought the languishing Las Campanas in March 2012.
It’s since restored the luster of the 4,500-acre residential, golf and fitness community in the foothills.
“I think that La Fonda is a wonderful, wonderful piece of property,” said Augur, who has successfully invested with Cienda in the past. It’s not that she’s a loyal patron. “I’m sort of a Colorado girl now, but I stayed there in the past and really liked it.”
Stanley and Linda Marcus were close friends of the Ballens and the Wises. Stanley’s widow hasn’t decided whether to join the investment group, but she’s delighted that the hotel will be in such good hands.
“Sam so enjoyed operating that hotel as the owner,” Marcus said. “He didn’t turn the management over to some group of professionals. He didn’t sell the hotel to a chain. He very much kept his finger in the pie, and Ethel as well, with every detail.
“To have that kind of management continue, where the ownership and the management are one in the same, is a rather unique situation today. Sam would be thrilled.”
The city, state and country should be, too, Marcus said.
“I don’t want to be overly dramatic, but La Fonda is as iconic as the buffalo. It conjures up the American Southwest.”