US: Portland-based investment firm Sortis Holdings has reportedly walked away from its acquisition of the Ace Hotels platform and its management arm.
At the start of 2023, Sortis announced the firm would acquire the Ace portfolio and its management company Atelier Ace for $85 million. The all-cash deal was expected to close in Q1 2023.
In August, lawsuits were later settled between the two companies to keep the deal on track.
Now, a statement issued by Sortis to The Portland Business Journal provides some insight on the situation.
Sortis said: “After the settlement agreement, [Ace] experienced material changes, including the loss of multiple hotel management contracts totaling over 20 per cent of the portfolio, as well as the departure of a key employee. These changes, coupled with the continued rise in interest rates since the execution of the original agreement, factored into our decision-making.”
The company added that 30 staff members (representing two per cent of its workforce) will be laid off as a result. Sortis plans to “double-down” on its remaining brands including restaurant chain Bamboo Sushi and hairstyling chain Rudy’s Barbershop.
According to OregonLive however, four lawsuits have been filed against Sortis Holdings and affiliates in recent weeks which claim the company is delinquent on debt. The company’s existing hotel portfolio includes the Ace Hotel and Woodlark Hotel in Portland, as well as the Mayflower Park Hotel in Seattle and the Alum brand.
Brad Wilson, partner and CEO of Ace Hotels, said: “Ace has always been, and still is, a well-capitalised, independent company with a unique place in the market that we are very proud of. We pursued the Sortis opportunity as an off-market arrangement with friends having common interests and goals for the Ace brand. We had hoped the Sortis platform, as described to us, would offer a pathway to accelerate growth with synergies that, in the end, were nonexistent. Since that time, we have moved on with positive results and are confident with our team and prospects.
“Ace has three, soon-to-be-announced properties under construction, and we are signing new deals at a consistent rate. We remain excited about Ace’s future and look forward to continuing to do what we’ve always excelled at: opening successful, beloved hotels in unique environments that draw consistent loyalty and attention.”