Investment affiliates of Starwood Capital Group and Jaws Mustang Acquisition Corp., a special purpose acquisition company, have publicly announced their intention to merge, leading to a public listing on a national securities exchange. The letter of intent outlines a business combination that would result in the direct or indirect acquisition of Starwood Capital's interests in a portfolio of hotels, including the 1 Hotels in Manhattan and Brooklyn and the De Vere Portfolio in the United Kingdom.
1 Hotels, created in 2015 by Barry Sternlicht, chairman and CEO of Starwood Capital Group, is a mission-driven luxury lifestyle platform that places environmental sustainability at the forefront without sacrificing luxury or a premium guest experience. The 1 Hotels portfolio has grown rapidly since inception and now comprises 11 operating properties and another eight under development across North America, Europe and Asia Pacific.
The De Vere Portfolio, previously acquired by investment affiliates of Starwood Capital Group, consists of a collection of country estates and ancestral family seats, from Winston Churchill to King Edward VII. The historic country estates and houses have been enhanced to accommodate a modern way living and working and are complemented by event spaces.
Under the terms of the LOI, the combined public company would become the direct or indirect owner of the Starwood Capital Entities' interests in the following 10 properties constituting the Initial Portfolio:
- 1 Hotel Brooklyn Bridge
- 1 Hotel Central Park
- The De Vere Portfolio, historic country estates and houses comprise the De Vere Wokefield Estate, De Vere Latimer Estate, De Vere Beaumont Estate, De Vere Horsley Estate, De Vere Cranage Estate, De Vere Tortworth Court, De Vere Cotswold Water Park, and De Vere Grand Connaught Rooms. These properties comprise 1,871 guest rooms and suites.
It is estimated that the initial portfolio earned $52 million of net operating income at the property level for the year ended Dec. 31, and the initial portfolio is projected to earn NOI at the property level of $62 million for the year ending Dec. 31, 2024. The 1 Hotel Brooklyn Bridge and the 1 Hotel Central Park will continue to be externally managed by SH Group Hotels & Residences U.S. and the De Vere Portfolio will continue to be managed by its internal operational team. It is expected that on an ongoing basis, the combined public company will seek to acquire additional hotel properties, including 1 Hotels properties.
The Starwood Capital Entities and Jaws intend to finalize their definitive business combination agreement in the coming weeks and will announce additional details at that time. There can be no assurance that a definitive agreement will be entered into or that the proposed transaction will be consummated on the terms or timeframe currently contemplated, or at all. Any such transaction would be subject to various contingencies and conditions, including the Starwood Capital Entities' requisite investor consents, third party consents and regulatory review, including from the Securities and Exchange Commission and a national securities exchange.