Investment firm to acquire Fargo-based TMI Hospitality
FARGO – TMI Hospitality, a Fargo-based operator and developer of hotels, will be acquired by Starwood Capital Group, a global private investment firm based in Greenwich, Conn.
Through its affiliate Starwood Global Opportunity Fund X, Starwood Capital would acquire all of the outstanding stock of TMI Hospitality from its employee stock ownership plan, according to a news release. The acquisition includes 188 hotels, the management company and the development platform.
The price of the acquisition was not released.
“From its inception, TMI has developed and operated more than 400 hotels, and I am pleased Starwood Capital recognizes the value created by our extensive experience and talented team members,” Lauris Molbert, chairman and CEO of TMI Hospitality, said in a news release. “With Starwood Capital, TMI will be able to continue pursuing its growth strategy while fulfilling its mission of impressing guests.”
Last month, Molbert debunked an article by a real estate industry publication that TMI was selling a portfolio of hotels valued at $1 billion to Starwood Capital. He described the report as “completely false” and said there was “no deal with Starwood Capital or anyone else.”
In an email Thursday, Laura Owen, TMI’s director of corporate communications, said there was no deal at that time.
“While we have now signed an agreement with Starwood, it is expected that the closing of the sale will take from six to nine months, which is normal for a transaction of this size and complexity,” Owen wrote.
She said no other information, including the sale’s impact on employees, would be released at this time. She said Molbert would not be available for an interview.
TMI Hospitality’s 180-plus select service and extended-stay hotels are located in 26 states under brands including Marriott, Hilton, Carlson and Choice. There are three TMI Hospitality hotels in Fargo.
It is an employee-owned company with more than 4,000 team members, including 250 corporate employees in Fargo. It moved into a new headquarters building at 4850 32nd Ave. S. last year.
When an outside company acquires the stock of an ESOP, the plan is terminated and each employee will get whatever the value of their account is, said Corey Rosen, a senior staff member with the National Center for Employee Ownership in Oakland, Calif.
According to a 2012 IRS filing, the total assets of TMI’s ESOP were valued at more than $288.5 million. Its total liabilities were $358.8 million, according to the 2012 filing, the most recent available.
Starwood Capital Group has $36 billion in assets under management. It was launched by Barry Sternlicht, chairman and chief executive officer, in 1991. It invests in individual real estate assets and portfolios of properties, and has also created other public companies and funds in real estate-related industries, including Starwood Property Trust Inc. and Starwood Energy Group.
Starwood Capital Group created Starwood Hotels and Resorts Inc., a hotel and leisure company that includes the St. Regis, Westin and Sheraton brands, but exited that investment in 2000.
Starwood Capital and its investors currently own 103 select-service hotels.
“The acquisition of TMI Hospitality, a proven and trusted property manager, offers Starwood Capital the exciting opportunity to build on our investments in select-service and extended-stay lodging,” Suril Shah, senior vice president, acquisitions of Starwood Capital, said in a news release. “We are looking forward to continuing the legacy of TMI’s development and management platform.”