SBE Acquires Morgans Hotel Group

LOS ANGELES–SBE has reached an agreement to acquire Morgans Hotel Group in an all-cash transaction, a move that SBE said will further strengthen its position as a global leader in lifestyle hospitality management, entertainment, F&B and development. SBE Founder, Chairman and CEO Sam Nazarian will retain majority ownership interest in SBE as well as all day-to-day management responsibilities.

With the acquisition, SBE will add Morgans’ collection of brands and 13 domestic and international hotel management agreements to its own portfolio, which includes SLS, Hyde and The Redbury; and venues, including Katsuya, Cleo, The Bazaar by José Andrés, Hyde Lounge and Umami Burger. In addition, SBE has a pipeline of 19 new hotels in development. The properties are scheduled to open through 2019, five of which are slated to open by end of 2016.

SBE will also take direct ownership of the 194-room Delano South Beach in Miami, 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; Jonathan Goldstein heads the global real estate investment company. In addition, The Yucaipa Companies will convert its existing stake in Morgans into an ownership interest in SBE.

“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, ” said Nazarian. “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 feature a portfolio of 20 global hotel properties with more than 6,000 keys in nine markets and more than 90 international entertainment and F&B offerings.

SBE, founded by Nazarian in 2002, has its roots in the hospitality and real estate industries, with more than 100 properties currently operating or in development. SBE also operates a robust residential business and an international development and design firm, Dakota Development.

Morgans Hotel Group was founded in 1984 and is widely credited as the creator of the first “boutique” hotel, according to SBE. It operates Delano in South Beach; Mondrian in Los Angeles, New York, South Beach and London; Hudson in New York; Morgans and Royalton in New York; Clift in San Francisco; Shore Club in South Beach, Miami, and Sanderson and St. Martins Lane in London, and has licensed a Delano in Las Vegas and a franchised hotel, 10 Karaköy, in Istanbul, Turkey.

When combined with the Morgans portfolio, SBE will expand its existing geographic diversity, giving it a larger global footprint, according to Nazarian. “SBE will leverage best-in-class brands across the combined company, further driving both short- and long-term revenue growth. We are very excited about the opportunities ahead,” he said.

In addition, the investment led by Cain Hoy will give SBE improved financial strength and growth opportunities. Nazarian added: “SBE intends to invest significant funds to revitalize the three Morgans-owned properties, Delano, Hudson and Clift.”

“Sam Nazarian and SBE are industry leaders in the lifestyle hospitality sector,’’ said Jonathan Goldstein of Cain Hoy. “The Morgans portfolio is an ideal addition to SBE’s existing stable of iconic brands. We are confident that Sam’s keen management team will leverage this acquisition into strong growth.’’

Yucaipa founder Ron Burkle expressed his solid support for SBE and the Morgans acquisition. “Sam Nazarian is a best-in-class operator in the hospitality space,” he said.