SBE has struck a deal to acquire Morgans Hotel Group for $794 million.
With the acquisition, SBE will add Morgans’ collection of brands and 13 domestic and international hotel management agreements to its own portfolio.
In addition, SBE expects to add an additional five hotel properties by the end of 2016 with the planned opening of SLS Brickell in Miami, Townhouse Hotel in Miami Beach, SLS Park Avenue in New York City, Hyde Hallandale in Florida and a planned hotel in the pipeline for the Mondrian Doha, for a total of 25 hotels by the end of this year.
SBE will also take direct ownership of the 194-room Delano Hotel in South Beach, the 878-room Hudson Hotel in New York City and the 372-room Clift Hotel in San Francisco.
As part of the transaction, SBE is receiving a significant investment from Cain Hoy Enterprises, a global real estate investment company headed by Jonathan Goldstein. In addition, The Yucaipa Companies will convert its existing stake in Morgans into an ownership interest in SBE.
SBE Founder, Chairman and CEO Sam Nazarian will retain majority ownership interest in SBE as well as all day-to-day management responsibilities.
“We have long admired Morgans, its impressive history and culture of service and innovation, so we’re delighted to reach an agreement on this transaction,” Nazarian said.
“Our strategic vision is to operate these amazing and unique lifestyle properties in key international gateway markets, and Morgans’ hotels, along with their talented team, fit perfectly within that vision.”
After completion of the Morgans acquisition, SBE will have a portfolio of 20 hotel properties with more than 6,000 keys in nine markets and more than 90 entertainment and food & beverage offerings.
SBE has a pipeline of 19 new hotels in development, comprising 4,500 keys, 3,800 of which are signed, under construction, or have an executed LOI, scheduled to open through 2019.
Nazarian said the company intends to invest significant funds to revitalize the three Morgans-owned properties, Delano, Hudson and Clift.”
Houlihan Lokey served as financial advisor and O’Melveny & Myers served as legal advisors to SBE. Fried Frank acted as counsel to Morgans Hotel Group Co. in its agreement to be acquired by SBE
The Fried Frank team was led by corporate partners Daniel J. Bursky and Warren S. de Wied and included corporate partners Julian S.H. Chung and Joshua Thomas Coleman; executive compensation & employee benefits partner Adam Kaminsky; litigation partner Scott B. Luftglass; and corporate associates Brenna C. Terry, Michael Chen, Gregory M. Conroy, Bram Couvreur and Jake Saifman.