Sam Nazarian, sbe, make move to transform to management company

10Sam Nazarian and his SLS hotel brand are looking to make the move to becoming a pure management play, not an owner of real estate—like most hotel companies have and continue to do.

Because: Who wants the headache that comes with ownership? Bloomberg reports that Nazarian, founder and CEO of SBE Entertainment Group, SLS’s parent company, is putting the SLS Beverly Hills on the market as part of a strategy to focus on its management operations and make hay now on its assets while pricing is high.

Word is the luxury property could bring in more than $700,000 for each of its 297 rooms (total sale price of around $208 million).

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And that's not all. SBE and its partner, Los Angeles-based CIM Group, are also in talks with three potential buyers for the 140-room SLS Hotel South Beach in Miami Beach. He believes the property could sell for about $900,000 per key, or $126 million.

“We are confident the SLS Beverly Hills will sell for more than $210 million if you look at how the property is performing, the possibility to add on development to the existing hotel and the revitalization of that neighborhood,” Nazarian told Bloomberg.

There are currently two SLS hotels operating, with more to come, including Las Vegas, New York, Philadelphia, Seattle and China.

Like most hotel coompanies, including Starwood Hotels & Resorts Worldwide and Hilton Worldwide, Nazarian is turning to the asset-light approach, he told Bloomberg. “The market is very hot right now. L.A. is trailing some of the bigger cities like New York and Miami, but it is recovering nicely. And Miami is as hot as it can be,” he said.

Miami is hot—and sbe has already done a big transaction there, having last month sold Miami Beach’s Raleigh Hotel to fashion designer Tommy Hilfiger for $68.5 million.

OPPORTUNITY KNOCKS
Bloomberg spoke to Nikhil Bhalla, an analyst at FBR & Co. in Arlington, Va., who said that now is the time to act in the hotel transactions market. “Right now, money is available for sales and for development because the hotel fundamentals have improved so much,” Bhalla said. “In the luxury sector, you have to pull the trigger quickly, especially when you have a small boutique brand. You generally have only a small window of opportunity as sales, financing and new development opportunities can dry up very quickly.”
 

 

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