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Pacific Park Operator Change of Ownership

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Pacific Park Operator Change of Ownership Information Item Date: May 2, 2018 To: Mayor and City Council From: Andy Agle, Director of Housing and Economic Development Subject: Pacific Park Operator Change of Ownership Introduction This report provides information on the transfer of ownership of Pacific Park’s operator, Santa Monica Amusements LLC (SMA). SMA operates Pacific Park, a two- acre amusement park located at 380 Santa Monica Pier, under a sublease agreement with the City’s ground-lease tenant, EPR Parks, LLC (EPR). The membership interests of SMA were previously owned by MAPCO, LLC, which has sold all of its membership interests to SM Park Holdings, LLC, a limited liability company formed by Premier Parks through its wholly owned subsidiary Pacific Park Management, LLC. Premier Parks is solely owned by Kieran Burke and currently operates 16 amusement and water parks throughout the US and Canada, including 10 as a tenant/operator for EPR. Staff has reviewed the associated information and materials, and the City Manager has the executed the necessary documents related to the ownership transfer. Background On July 23, 1994, the City entered into a lease agreement with Santa Monica Amusements, Inc. (the predecessor-in-interest to Santa Monica Amusements, LLC) for the operation of Pacific Park. On or about September 24, 2002, the City and Santa Monica Amusements, LLC, (SMA) entered into an Amended and Restated Lease Agreement (Ground Lease) with a term ending May 25, 2026 and two 10-year options to extend the term through May 25, 2046. In 2010, SMA entered into an asset purchase agreement with CNL Income Partners, LP, a real estate investment trust, and conveyed its interest in the Ground Lease and personal property to CNL. CNL, in turn, assigned its interest in the Ground Lease to CNL Income Pacific Park, LLC and its interest in the personal property to CNL Income Pacific Park TRS Corporation. On December 14, 2010, Council consented to the transfer. As part of the transaction, CNL entered into a sublease agreement with SMA for the continued operation and management of Pacific Park. In 2012, SMA requested the City’s consent to the assignment of the membership shares of SMA to MAPCO, a limited liability corporation owned by Mary Ann Powell and James Steven Powell. On March 27, 2012, Council consented to the transfer, which changed the underlying ownership of SMA while maintaining the sublease agreement with SMA for the continued operation and management of Pacific Park. In late 2016, CNL Lifestyle Properties, Inc., the parent company of CNL, entered into negotiations for a bulk sale of assets (which included Pacific Park) to EPR Properties (EPR), a publicly traded real estate investment trust. On Feb 16, 2017, the City Manager consented to the acquisition and assignment of the ground lease to EPR. The sublease between EPR and SMA remained in effect and without change as part of the transfer to EPR. Discussion Under the transfer, SMA will continue as sublessee and operate Pacific Park. However, the underlying ownership of SMA has been transferred from MAPCO to SM Park Holdings, managed by Premier Parks, a privately held, limited-liability company owned by Kieran Burke, former Chair and CEO of Six Flags Entertainment Corporation. Premier Parks owns and operates 16 theme and water parks throughout the United States and Canada, including 10 amusement parks that operate under sublessee/operating agreements with EPR. Its portfolio includes Clementon Amusement Park, Nashville Shores, Ocean Breeze Waterpark, Darien Lake, Frontier City, Magic Springs, Myrtle Waves Water Park, Rapids Water Park, Wet'n'Wild Hawaii, Wet'n'Wild Palm Springs, Wet'n'Wild Toronto, Wet'n'Wild Phoenix, Wet'n'Wild SplashTown, White Water Bay, Wild Waves Theme Park and Elitch Gardens. Premier Parks expects no material interruption or alteration in the operation of Pacific Park as a result of the change in the membership interest from MAPCO to SM Park Holdings. The day-to-day operations will continue to be managed by the current general manager, the Premier Parks management team has ample experience in the management of amusement parks, and Pacific Park will continue to be operated in accordance with the City’s ground lease with EPR. There have been no modifications or amendments to the terms of the ground lease or sublease as part of the transaction. Staff has reviewed the operating experience and information provided by the parties and has met with the CEO of Premier Parks and representatives of EPR and MAPCO. The Premier Parks management team has demonstrated extensive knowledge and experience in the operation and management of amusement parks. The transfer of the membership interests in SMA complies with the assignment provisions of the ground lease. Given Premier Parks’ background and experience, the City Manager has executed the documentation required for the City’s consent to the transfer of membership interest in SMA from MAPCO to SM Park Holdings. Prepared By: Elana Buegoff, Pier Administrator .
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