SLS Las Vegas visionary Sam Nazarian will sell his company’s 10 percent stake in the Strip resort to majority owner Stockbridge Capital Partners, ending his eight-year association with the property, formerly known as the Sahara.
Under terms of the agreement announced Tuesday, San Francisco-based Stockbridge will pay a licensing fee to Nazarian’s SBE Entertainment for the SLS name and the property’s restaurant brands that are owned by the Los Angeles-based company. The new arrangement is similar to one currently in place between SBE and SLS Beverly Hills, which was sold to another operator.
Financial figures were not disclosed.
In a statement, Stockbridge Executive Managing Director Terry Fancher said the conversion of the management agreement into a license agreement benefits all parties involved. The company owns the other 90 percent of the resort.
“It is more efficient from a cost and operational standpoint and will give the SLS Las Vegas flexibility to introduce new brands or restaurants from time-to-time to further improve guest experience and strengthen financial performance,” Fancher said.
The 1,600-room SLS Las Vegas has struggled financially. According to securities filings, the property lost more than $89.3 million in the first six months of 2015 and Stockbridge made $28.1 million in capital contributions to the resort through June 30. After the second quarter ended, the company made additional contributions totaling $13 million.
This summer, Los Angeles-based retailer Fred Segal removed the seven stores the company had run inside the resort.
Nazarian had little involvement with the SLS Las Vegas after Nevada gaming regulators last December gave him a one-year limited gaming license but said he wasn’t allowed to have any say in the resort’s operations. During the licensing investigation, Nazarian acknowledged he used cocaine and struggled with alcohol abuse.
Nazarian said in a statement that SBE and Stockbridge worked together on the property’s strategic direction.
“We believe formalizing this transition is a win-win for the thousands of hotel employees and guests of SLS Las Vegas,” Nazarian said. “The resort remains a valued member of the expanding collection of SBE branded and managed luxury hotels across the country and the globe.”
The deal allows Nazarian to pursue other projects in Las Vegas. SBE operates the Hyde Lounge at Bellagio.
After the licensing matter, Nazarian took a “sabbatical” from SBE to seek treatment. He returned in April and severed ties with a private equity group planning to invest $500 million into SBE projects. In May, SBE sold its SLS Beverly Hills for $195 million and the SLS Hotel South Beach in Miami in June for $125 million.
The Wall Street Journal reported that Nazarian is close to finalizing a merger with Morgans Hotel Group, which would create a company with hotel management contracts in major U.S. cities.
Not much is expected to change with current management and director of the SLS Las Vegas. The day-to-day operations are overseen by SLS President Scott Kreeger, who said in an interview this summer that “fundamental business model changes” were being made at the Strip resort.
Nazarian led the purchase of the Sahara in 2007 and oversaw the redesign $415 million renovation of the resort after it was closed in 2011. The SLS Las Vegas opened in August 2014. He was viewed as a cheerleader for the Strip’s northern end, making charitable contributions to the neighborhood and was the property’s public face.
Nazarian sold his multi-million dollar home in the The Ridges this summer.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871. Find @howardstutz on Twitter.