In response to an analyst question during RH’s earnings call Thursday afternoon, the CEO of the Corte Madera luxury retail brand let slip what amounted to a $50 million announcement.
“I guess I can talk about that, right?” Gary Friedman asked another executive. “We own it, right?”
He then explained: RH recently closed on the purchase of an 857-acre property in Napa Valley that in the late 1800s held the Napa Soda Springs Resort. Some of those structures, never renovated, remain standing to this day — check out photos in the gallery above.
The property hit the market for the first time in 40 years in late 2019, with owners Richard and David Ehrenberger listing through JLL seeking $50 million. It’s not immediately clear what price RH (NYSE: RH) ultimately agreed to.
“It’s probably the most beautiful piece of property in all of Napa,” Friedman said on the call. “It still has the ruins, where we’re going to build a guest house and residences and a winery.”
“We have some of the best soil in all of Napa Valley, organic farms,” he continued. “We’ll build an experience the world has never seen.”
JLL’s listing agent for the property, addressed at 2000 Soda Springs Road in Napa, did not immediately return a request for comment on Thursday afternoon, but I’ll update this story if I hear back.
An RH spokesperson said via email the company had no further comment.
The property is one of the largest continuous parcels in Napa Valley, per JLL’s 2019 announcement of the listing. The parcel’s main address at 2000 Soda Springs Road is just 15 minutes from downtown Napa by car.
RH’s long-term strategy in recent years has been to move from designing space to selling them — developing its consumer-facing architecture and interior design service offerings to leapfrog from the $170 billion North American home furnishings market to the $1.7 trillion housing markets. A cornerstone of this strategy is RH Residences — fully furnished luxury homes, condos and apartments with integrated services “that deliver taste and time value to discerning time-starved consumers,” as the company has reiterated in its latest letter to shareholders.
The Napa property will fit into that strategy nicely.
“It is the most extensive, richest sanctuary opportunity in the Bay Area,” said JLL’s senior managing director Gerry Rohm in a 2019 press release describing the Napa site. “A future owner will have an opportunity to customize the parcel sizes and locations to match their visions and creative stewardship.”
On Thursday, the company announced the opening of its RH Guesthouse New York, a “hospitality experience” — not merely a hotel, the brand says — featuring six ornate 500-square-foot guest rooms, three 1,000-square-foot suites and Friedman’s own 2,600-square-foot residence occupying the entire top floor and sometimes available for booking. Just a stone’s throw from RH’s New York gallery, the development also features a rooftop infinity pool, a dining terrace and two restaurants — The Dining Room and the Champagne and Caviar Bar.
RH’s hugely ambitious retail developments in recent years have often involved rehabilitating and incorporating parts of landmark historical structures into the new spaces, like the facade of the Bethlehem Steel building in RH’s five-story design gallery at Pier 70, which opened this spring. Other design galleries in Boston, Chicago, and New York have followed this path as have upcoming projects across Europe — including one Friedman hinted at on Thursday immediately after announcing the Napa purchase.
“We’re close to closing,” Friedman said. “There’s an incredible property somewhere in Europe that you’ll hear about too, we can’t talk about that yet.”
In the fiscal second quarter ending July 30, the company reported net income of $122.3 million on revenue of $991.6 million, up from $226.7 million and $988.9 million prior year.