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$20M Makeover In Works for Historic Hermosa Inn

PARADISE VALLEY, AZ-The long-time owner sells a 50% stake in the 35-room hotel for $9.7 million to facilitate an expansion. More rooms, a spa and meeting space are coming.

By John McCloud | Updated on November 28, 2007

PARADISE VALLEY, AZ-The infusion of nearly $10 million from a new equity partner has positioned the owner of the Hermosa Inn to initiate a major upgrade and expansion of the historic 35-room asset. Spring Creek Development, headed by local investor Fred Unger, will spend $20 million to refurbish the rooms and public spaces, build a two-story main lodge with 14 more guest rooms and add a spa.

The boutique hotel, located at 5532 N. Palo Cristi Rd., was hand built in 1935 by cowboy artist Alonzo Megargee as his home and studio. Over the years, the adobe-walled property evolved into a guest ranch and later a small hotel. Various owners added a pool, tennis courts and several buildings with guest rooms. Unger and his wife Jennifer acquired the holding in 1992 and reopened it in 1994 after a full renovation as the Hermosa Inn. The main structure is listed on the National Register of Historic Places.

Unger says he has been planning the renovation for more than a year, but was unable to move forward with most of the changes until he brought in Phoenix-based Fountainhead Equity Partners, headed by Art Cunningham and John Hill. Fountainhead reportedly paid $9.7 million to acquire a 50% interest in the inn.

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