Correction: This story has been updated based on additional information provided about the initial list of properties included in the announcement of the Chapter 7 sale.
Dive Brief:
- Following Sonder’s November bankruptcy, a number of fully furnished boutique hotels, cottages and apartments previously operated by the failed company are available in a Chapter 7 bankruptcy sale of leasehold interests, according to an announcement from investment and advisory firm Gordon Brothers, which is facilitating the transactions.
- The properties span major U.S. urban markets such as New York, Los Angeles, Chicago, Phoenix, New Orleans and others across 17 states, according to Gordon Brothers documentation.
- In the wake of Sonder’s bankruptcy, hospitality industry professionals have criticized its master-lease operating model. Some operators have since stepped in to convert Sonder properties under their own brands and operating modes.
Dive Insight:
Gordon Brothers is offering the Sonder properties for leasehold interest, with hotel owners or other commercial real estate partners able to acquire the right to use and possess the assets under long-term lease agreements. Sonder operated under a similar model, signing long-term fixed leases, mixed leases or revenue shares with real estate professionals, per its website.
According to some industry professionals, this operating model may have contributed to the company’s eventual downfall, though, as the lease arbitrage model has historically proved “economically disruptive across real estate cycles,” Roman Pedan, founder and CEO of apart-hotel company Kasa, told Hotel Dive last month.
Kasa, among other hospitality companies, stepped in to take over some of Sonder’s properties in the wake of its bankruptcy. Kasa operates hotels under a traditional management agreement, Pedan said.
As of last month, Kasa was in active discussions with Sonder owners in New York, Chicago, Philadelphia, Phoenix, Seattle and Washington, D.C., as well as other cities across the U.S. and Canada, Pedan said.
Michael Burden, co-head of North America real estate services at Gordon Brothers, said in the release that the available Sonder properties “offer a unique opportunity for growth minded hospitality companies to acquire premier turnkey locations to rapidly expand their portfolio.”
The full extent of the property sale was not immediately clear. The Gordon Brothers list of 190 properties also includes several Found-branded boutique hotels, but according to Found Hotels those properties were erroneously listed for sale. Counsel for Found Hotels said, “Sonder’s rights and relationship to the FOUND Hotels properties terminated in or prior to Q1 of this year and no interest in these properties is available through the bankruptcy process or otherwise.”
