Bill Gates, best known for his role as the tech wizard who founded Microsoft or as the world's most prominent billionaire-philanthropist, may find himself in the hotel business before long. Although new to the game, he'll have some experienced partners.
In partnership with Saudi prince al-Waleed bin Talal and Four Seasons founder Isidore Sharp, Gates is backing a $3.7-billion (€2.9 billion) management buyout of the Four Seasons hotel chain.
The Toronto-based hotel company was one of the last publicly traded luxury brands, following the private equity-backed acquisitions of upscale rivals such as the Raffles Hotel Group, The Savoy Group, Fairmont Hotels and Resorts and Société du Louvre.
If the deal is approved, Gates' Cascade Investments and bin Talal's Kingdom Hotels will become the major stakeholders in the company. Triples Holdings Limited, Sharp's family investment firm, will retain about 10 percent of the company. The remaining ownership stake would be split equally between the world's richest man and the Saudi prince.
Sharp, who founded Four Seasons with one hotel in Toronto in 1961 and has built into a luxury hotel empire that manages 71 hotels spread across 31 countries, has refused to consider any other offers.
“This transaction, with these investors, is the only one I am prepared to pursue,” Sharp said in a statement.
Some have publicly speculated that Sharp is increasingly interested in the valuable real estate around some Four Seasons properties, but that the realities of running a public company didn't give him the freedom to pursue a real estate-oriented strategy. As part of the deal, Sharp would cede much of his voting control to the entities controlled by Gates and bin-Talal, but would retain a say in the company's future.
While Sharp is looking to retain influence over the company he built, bin Talal and Gates, who already held large stakes in the company, are buying in for different reasons. The price already controls a small real estate empire that includes interests in nine Four Seasons properties.
Some have speculated that Gates, who controls the world's biggest technology company, is looking at the convergence between hotels and technology even though Four Seasons has traditionally focused on paying personal attention to its guests.
“While Four Seasons isn't talking about its tech plans, it's hard not to wonder: Now that the world's richest computer nerd owns a hotel chain, can robot concierges be far behind?” Ivor Tossel wrote in a column in The Globe and Mail.
Caribbean fund grabs Aruba property
The Caribbean Real Estate Opportunity Fund, which counts the Caribbean Property Group (CPG), Goldman Sachs and Perry Real Estate Partners among its investors, has acquired the Aruba Marriott Resort & Stellaris Casino for $237 million (€185 million) from Plant Hotel NV. The four-star 413-room resort boasts the largest guest rooms on the island, a 17,000-square-foot casino and 10,000 square feet of meeting and banquet space. According to Sonnenblick Goldman, the real estate investment bank that advised Plant Hotel, Aruba remains an attractive investment market due to high barriers to entry, good weather, political stability, strong asset performance and easy access to air travel.
Oak Hill makes logistics buy
Oak Hill Capital Partners has acquired a majority stake in Arnold Logistics, a warehouse and transportation logistics firm for an undisclosed sum. Robert Bass' buyout shop, which has invested in logistics before, says it sees Arnold as a solid platform to build a national third-party logistics business thanks to its strong management and solid customer base. Oak Hill closed its second private equity fund on $2.5 billion (€2.0 billion) last year.
Partnership will overhaul Hard Rock
Boutique hotel firm Morgans Hotel Group and DLJ Merchant Banking Partners, a private equity investment affiliate of Credit Suisse, will invest $250 million (€195 million) in a joint venture to acquire and redevelop the Hard Rock Hotel & Casino in Las Vegas. Initially, Morgans will put up $50 million to gain a one-third interest in the joint venture while DLJ will put up $100 million to gain a two-thirds interest. The firm will also supply additional capital for any expansions of the Hard Rock property. Morgans purchased the hotel for $770 million earlier this year.
Oxford, Perry buy Chicago hotel
Hotel investment and advisory group Oxford Lodging is working with Perry Capital, a hedge fund, to acquire the Allerton Hotel in Chicago. The transaction was reportedly valued at $70 million (€55 million). Under the new owners, the hotel will undergo a $10-million renovation, which will include moving the hotel's lobby back to the second floor. Perry Real Estate Partners, the property arm of Perry Capital, is headed up by former Blackacre pro Andrew Isikoff. Oxford currently manages a portfolio of more than 13,000 rooms in the US and Japan.
BRS, Canyon nab Logan's Roadhouse
Private equity firms Bruckmann, Rosser, Sherril and Canyon Capital Advisors have acquired Nashville, Tennessee-based casual dining chain Logan's Roadhouse, which operates more than 150 restaurants in 20 states, for $486 million (€380 million). Logan's operates 143 company-owned restaurants and franchises 25 of the eateries. BRS and Canyon are expected to lease the properties back to the chain.
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