The $85 million acquisition of the hipster brand marries a brand developer with a proven operator with plans to acquire assets and double the portfolio.
Incubator, operator, and development platform Sortis Holdings is buying what it sees as the upside of Ace Group International, having purchased the lifestyle brand in mid-January for $85 million in cash. There is no real estate involved in the deal (there is a lease in Portland) as Sortis is only acquiring the management company, the brand and Ace’s intellectual property
The cool and quirky brand with 12 hotels – 10 Ace properties as well as currently closed Sister City in New York City and luxury Maison de la Luz in New Orleans – has a unique niche that Sortis believes it can exploit and grow. Currently, seven hotels are open in the U.S., as well as one in Toronto, Canada, Sydney, Australia and Kyoto, Japan. Properties in Chicago, London and Pittsburg, Pennsylvania, have closed permanently.
Sortis Holdings partner Kelly Sawdon, who has remained a partner with Ace Hotel Group, told Hotel Investment Today that there is potential to more than double the portfolio on a global basis. She also likes the potential to grow Sister City and Maison de la Luz, as well, and added that Ace will start to look at resort opportunities. As opposed to the more recent asset-light approach to growth, Ace will now look at new development and acquisitions, sourcing Sortis Holdings capital and suitable partnerships
“We’re open to different opportunities,” Sawdon said. “There are still a lot of markets in the U.S. that we want to get into. We’re looking for good partners, whether it’s on a specific or multiple development projects together. We’re excited about where we’re going take the brand and the team that’s still going to be part of that ride.”
Sawdon said that deal came together because it’s a match between Ace’s management expertise and Sortis’ desire and ability to develop or acquire more hotel real estate. She added that the deal was not a result of stress on the Ace balance sheet.
Sawdon said a majority of the Ace management team will join Sortis when the deal closes, including CEO Brad Wilson. This team will likely manage all Sortis hotel assets.
Ace also seems to match Sortis’ DNA. The Portland, Oregon-based hospitality development firm owns and operates idiosyncratic brands like Rudy’s Barbershop, Bamboo Sushi and multiple coffee concepts, creating what it calls a series of “spirited cultural hubs that ignite neighborhoods and foster collaboration.” So, you might see an Ace hotel alongside another Sortis concept.
Sortis Holdings’ existing hospitality portfolio already includes ownership of the Ace Hotel Portland and management of the Woodlark Hotel in Portland and Mayflower Park in Seattle. It is also developing a residential/membership concept in college towns called Alum brand and has additional hotels under development in Hollywood, Seattle, Nashville and Carpinteria, California. It also actively involved in the co-development of a luxury hotel
as well as an upscale camping concept on 2,400 acres near Bend, Oregon.
The combined entity of Ace Group International and Sortis Holdings will initially have 15 hotels under management
Looking at the existing portfolio, which has been attracting the young, experiential crowd since its 1999 inception, Sawdon said what is exciting is what it can do with regenerative travel and sustainability. “It’s something that was built into the Ace DNA from very early on with things like bulk amenities,” she said. “Now we have the ability to get some more expertise involved to make sure more of those types of initiatives get implemented as opposed to becoming value engineered. We are excited to really go deeper on those issues and opportunities.”