Sam Nazarian, the businessman who led the creation of SLS Las Vegas, is selling his ownership stake in the financially struggling Strip resort and his company will no longer manage the property.
San Francisco-based real estate investment firm Stockbridge Capital Partners, which already owns 90 percent of the resort, is buying the 10 percent that Nazarian and his family own, the Wall Street Journal reported this morning.
Nazarian’s company, SBE Entertainment Group, will transition from a management agreement to a licensing agreement with the hotel. That will allow the SLS branding and operations to continue unchanged, but SBE will not be involved with running the resort — similar to a franchise arrangement.
Terry Fancher, the executive managing director of Stockbridge, said in a statement that the change “benefits all parties involved,” including guests, employees and the companies behind 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 in the statement.
Nazarian was once the public face of SLS Las Vegas, but he stepped back from day-to-day operations amid dramatic appearances before Nevada gaming regulators at the end of last year. Since then, he has apparently shifted his focus to larger projects for his company, including a possible merger with Morgans Hotel Group Co., according to the Journal.
Nazarian’s statement today suggested that the SLS management change was a natural one.
“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.”
Since its opening in August 2014, SLS has fought to overcome its out-of-the-way location on the far end of the north Strip, among other challenges. The resort has made numerous high-profile changes — such as hiring a new president, closing its buffet and revamping its loyalty club — while facing strong financial turbulence.
The resort’s net loss for the first half of 2015 was about $84 million.