The Reuben Brothers has acquired the Curtain Hotel and Members Club in Shoreditch for an undisclosed fee.
The news came as rumours persisted that Soho House was considering an IPO, as the popularity of private members’ clubs grows.
At The Curtain, a subsidiary of Michael Achenbaum, of the Gansevoort Hotel Group and Jeffrey Levine, the co-developers of the project, retained management of the property via a long-term lease.
Achenbaum said: “The decision to sell the freehold was prompted by several unsolicited approaches. However, our long term operating lease demonstrates our commitment to this exciting business which has received critical acclaim. We are delighted to be aligning with the Reuben Brothers who are experienced long-term investors and incredibly supportive of the diverse social elements of The Curtain. The sale of the freehold will act as a catalyst for us to develop sister properties in different international locations.”
Reuben Brothers has no plans to make any changes to the management or operations of the hotel and members club.
The Curtain, which opened in summer 2017, has more than 115,000 square feet of space over six stories and 120 rooms and suites.
The purchase followed Reuben Brothers’ acquisition in August of 47,48, & 49-50 Poland Street in Soho from UK-based Shiva Hotels. The site hds planning consent by Westminster for redevelopment into a hotel with seven floors. Shiva Hotels will operate the new hotel under a long lease.
Reuben Brothers has been building its exposure to London’s hotel market, with the end of last year seeing the company given planning permission to refurbish 94 Piccadilly – known as the In and Out Club – into a hotel. The group acquired the site in 2011 and had originally planned to develop it as a residential property.
At Soho House, founder Nick Jones continued to fuel rumours of either an IPO or taking on another investor, commenting about the need for more capital to fuel the company’s growth, opening properties last month in both Amsterdam and London’s White City.
Soho House was reported to have appointed Goldman Sachs and JP Morgan to look at fundraising options, having been beset with financing issues in the past as it targeted three to four new clubs every year.
The company is 10% owned by Nick Jones, with Richard Caring holding 30% and Yucaipa holding the remainder, which it acquired in 2012 for GBP250m.
In April last year the group signed an agreement with Permira Debt Managers to refinance its existing debt and support future growth. The key elements were: a GBP275m, senior secured loan with a five-year maturity from closing at Libor +7%, a further GBP100m of available financing to drive further global expansion of the business on the same terms and renewal of its revolving credit facility of GBP30m plus GBP5 accordion for four-and-a-half years.
The company described the debt solution as “highly flexible and tailored so that the cost of the loan reduces as the company’s net debt levels decrease”.
The agreement allowed it to pay off its GBP152.5m 9.125% senior secured notes and retire its GBP40 of PIK notes, before the maturity date of October 2019.
The company’s most recent results filing, for the year to 1 January 2017, saw it report that it had, at that date, 69,400 members, with a global waiting list of over 44,000. It operated 18 Houses, one hotel, 43 public restaurants, 15 spas, two cinemas and 527 hotel rooms. The group offered two types of memberships – access to an individual site and access to the full portfolio, with fees ranging from GBP400 per year to GBP1,785.
The group’s primary source of turnover was F&B, which accounted for 60%, with membership fees at 16%, accommodation 13% and retail and other sales 11%.
At the UK business, turnover for the year rose by 14%, to GBP118.9m, driven by growth in F&B, with accommodation turnover growth of GBP4.8m. Ebitda for the period rose by 1% on the year to GBP10.1m. Other than the Dean Street Townhouse the group’s hotels were co-located within its Houses.
HA Perspective [by Katherine Doggrell]: Private members’ clubs fall into something of a niche – and bear with me here – between hotels and Airbnb, where guests can enjoy the service aspect of being able to flag down a passing staff member to get them a coke or a footrub, with Airbnb’s focus on the individual. No more cookie cutter, here you can pay to feel special, something which, unless you’re a diamond-encrusted platinum member, is not a given with hotel loyalty schemes. The fact that your fellow guests have been vetted is merely a bonus.
All this making-you-feel-special comes at a cost, of course, as does rapid rollout, which is why we continue to hear that Soho House is touting for capital as it continues its global rollout. With a waiting list of 44,000, demand at least seems a safe bet, although clubs are, by their nature, vulnerable to scandals and shifts in fashion.
Reuben Brothers, meanwhile, continue to intrigue, not least because all eyes are on the Belmond sale, where it holds the largest stake. Speculation suggests that a buyer will come from within the group, whereupon, should it be so minded, Reuben Brothers could launch a global members’ club with quite the spectacular estate.
Additional comment [by Andrew Sangster]: It has been said in these pages before and we will keep saying it: the lines between hospitality products continues to blur. In fact, the fuzziness goes way beyond traditional hospitality with the line between offices and hospitality increasingly hard to distinguish.
Is it the free beer and snacks that makes WeWork worth the USD20bn plus it is currently valued at? Certainly, the ability of WeWork to service its clients – albeit with state-of-the-art technology – is a critical factor.
WeWork is clearly not just an office with some hospitality but its technological offering that enables it to do this effectively and efficiently is what makes it so valuable, at least in the eyes of the true believers in Silicon Valley.
And so to private members clubs which more clearly have an hospitality element. But such clubs are increasingly competing with WeWork as well, offering not just a refuge and a drink but also somewhere to do work.
Hotels, of course, are in the middle of all this. They offer the hospitality and they have business centres and other places to work. The challenge in taking on all these different roles has been that hotels have lacked focus and have not offer something compelling.
Our story this week on Village Hotels gives a great example of a hotel group that has thought beyond beds. It can and should be done by other chains.