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Posts Tagged ‘Portland’

While many are focused upon Gordon Sondland purchasing the ambassadorship to the European Union for a bargain price of $1 million,  few understand how he became a successful hotel operator.  This is a fascinating story, inspired by Fred Trump, President Trump’s father.

In the commercial real estate world, few names are more highly regarded than those of the Sonnenblick family, see bio at end of post.   It was Bob Sonnenblick who originally had no interest in the family business, until hearing a presentation from Fred Trump at the Wharton School of Business

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This is indeed Gordon Sondland’s “secret sauce” because it is Sonnenblick-Eichner who arranges the financing allowing Sondland to purchase his hotels.  This includes a $240 million deal in 2015 and many others.  Sonnenblick essentially taps its clients, which include state pension funds, banks and private equity firms to extend the financing to borrowers such as Sondland’s Provenance Hotels.

Sondland has collected a terrific mix of vintage hotels yet one has to wonder how his business will be impacted by his political activities with respect to President Trump.  Even Trump supporters may cite Sondland’s poor judgement if President Trump is impeached.

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It is not readily known exactly which pension funds, banks or private equity firms Sonnenblick is using.   Is it KKR, Blackstone, TPG or are state pension funds funding the private equity funds who in turn fund these deals?  One can only speculate and certainly more clarity in needed regarding state pension funds since these are our tax dollars at work.

Where this gets more interesting is upon realizing that Sondland’s wife Katy Durant at the time of his big $240 million deal with Sonnenblick was Chair of the Oregon Investment Council, which manages Oregon’s $70 billion public pension system and had extensive interaction with most of the leading commercial real estate firms, and related entities and consultants owned by private equity firms, including KKR and Blackstone.

Title Page from December 2015 OIC Meeting;

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Durant is now Chair of the Provenance Hotel Partners, the finance side of Sondland’s business.  It Provenance Hotel Partners Fund 1 has more than $500 million in asset yet it is not known who the partners are.

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Gordon and his key partners Bashar Wali and Steve Rosenberg run the Hotels and related real estate.

Org Chart for Provenance Hotels:

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As an investment advisor I find retirement plans most revealing.  Poor plans usually indicate poor management.  And good plans, like Intel or Les Schwab, show good management and a potentially good investment.

Sondland’s plan is indeed very similar to the plan offered to Trump employees. The Provenance plan, which is 15 year old, has total assets of $2.7 million at 12/31/2017.   It indicates 615 active participants yet only 231 active accounts with balances at year end.   The total employer contribution was $60K or $250 per participant.   And remarkably there is a vesting schedule in which employees are not fully invested until after 6 years of service.

This is about as ridiculous as Sondland claiming one of his hotel rooms in Seattle is his primary residence so that he can avoid paying Oregon State income tax.   Perhaps one very successful local business owner put it best when saying via email  “I toured his residence at the Roosevelt Hotel and it was beyond absurd.  It was all staged with clothing and a kids room with toys on the floor (despite his kids being in high school at the time).”

Aspen Capital:

Sondland was Previously CEO of Aspen Capital, a hard money lender, which now lists his Provenance Hotels partner Steve Rosenberg, and Lawrence Mendelsohn as principals.

Mendolsohn was Andrew Weiderhorn’s partner in the failed Wilshire Capital mortgage collection firm that also took down Jeff Grayson’s Capital Consultants. Weiderhorn went to prison as several unions suffered permanent losses on what were supposed to be low risk short term fixed income investments.

Ryan Frank of the Oregonian did a story on Feb 28, 2010 “Foreclosure rescues by Aspen Capital affiliate — a lender of last resort — failed nearly half the time.”  highlighting that more than 50 percent of Aspen’s borrowers had their residential mortgages foreclosed on them.

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Additional Supporting References for Post:

Bio for David Sonnenblick of Sonnenblick-Eichner

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Hotel Publication Summarizing Key Financing Deal for Sondland

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Bob Sonnenblick, Inspired by Fred Trump to Enter the Family Business

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Disclosure:  This post is both broad and detailed so that interested analysts and journalists can gather key facts and form their own opinion.   Reviewing incredible schemes such as this orchestrated by Robert Mercer and Jim Simons often attract teams of analysts and reporters.  This post is original fact checked independent research available free on the internet.

In order to understand Robert Mercer’s brilliant financial engineering,  let’s begin our analysis using three outstanding local Portland beers.  They are Rogue Brewery’s Shakespeare Stout, Widmer’s Hefeweizen and Deschutes Breweries Fresh Squeezed IPA.

All three beers are distributed by Portland based Columbia Distributing, one of the nations largest beer distributors, which was purchased by the Jim Simons controlled investment fund Meritage in 2012.  Simons along with Robert Mercer is Co-CEO of the $100 billion Rentec hedge fund.

While Meritage CEO is listed as Nat Simons, Jim Simons son,  the elder Simons holds the controlling ownership position per SEC filings, owning more than 75 percent of the Meritage fund.

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This analysis will unravel the relationship between Rentec’s Medallion fund, its company retirement plan,  the Meritage private equity fund, which purchased Columbia Distributing in 2012, and numerous tax exempt foundations including those of Jim Simons, Nat Simons and Robert Mercer.

The key to understanding this financial engineering feat is analyzing the Medallion fund, which is managed by Renaissance Technologies.  This hedge fund is indeed the unifying thread.

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Warren Buffett has announced his largest buyout in history, the $38 billion takeover of Portland, Oregon based Precision Castparts.  This is almost twice the size of the Heinz takeover, one of his largest prior takeovers.

Heinz and other Buffett enterprises, including Burlington Northern and Pacific Power, are having a strong negative impact on the Oregon economy.

This includes potato farmers in Eastern Oregon who had a win/win long term relationship with Heinz cancelled, and local communities battling to prevent oil and coal from being shipped by rail thru their communities without adequate safety guidelines.

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In late 2014 the tax exempt Oregon Historical Society sold the Sovereign Apartment building, after owning it more than 30 years.  The Society maintains an outstanding board of directors and this was clearly a difficult decision. As part of the sale the society negotiated a long-term lease for itself yet its 44 tenants were last month given six months to vacate.

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