Dive Brief:
- Following Sonder’s November bankruptcy, roughly 190 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. The properties include Found Santa Monica and Found Miami Beach, both of which opened last month as the first U.S. hotels under Marriott International’s new Series collection brand.
- 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 properties include several Found-branded boutique hotels, including Found Union Square in San Francisco, Found Dupont Circle in Washington, D.C., and Found Chicago, in addition to the hotels that joined Marriott’s Series portfolio last month through a partnership with Hawkins Way Capital.
Additional Found hotels slated to join Marriott’s Series brand in the U.S. through the Hawkins Way tie-up will be located in Chicago, San Francisco, San Diego and Santa Barbara, Marriott previously announced.
