Starwood, BR Guest Marriage Woes

20121008-NEWS--0001-NAT-CCI-CN_-- 10/5/2012 7:18 PM Page 1 NEXT WEEK: 25 YEARS OF 40 UNDER 40. A SPECIAL REUNION ISSUE CRAIN’S® NEW YORK BUSINESS VOL. XXVIII, NO. 41 WWW.CRAINSNEWYORK.COM OCTOBER 8-14, 2012 PRICE: $3.00 Starwood, BR Guest HOT marriage woes A $150 million deal signed at market top falls far short of its original goals BY LISA FICKENSCHER The 2007 marriage between restau- rant group BR Guest Hospitality and private-equity firm Starwood Capital Group brought together two power- houses that vowed to turn out dozens of trendy hotels and restaurants around the world. Starwood Capital, the original in- vestor behind Starwood Hotels & Re- sorts,was going to develop its own hotels and populate them with BR Guest’s proven restaurants, including Dos Caminos and Blue Water Grill. Its 26 plan called for BR BR GUEST Guest to open as RESTAURANTS in New York, New many as 80 eateries, Jersey, Florida up from 16, in just a POPULAR DEMAND: and Nevada couple of years. Director Glenn Lowry Source: BR Guest That was, of will keep the course, before the museum open economy tanked. Since then, the part- seven days a week. nership between Starwood Capital’s chief executive, Barry Sternlicht, who created Starwood Hotels & Resorts and left that company in 2005,and BR Guests’ Stephen Hanson has turned into a more modest operation, falling far short of its original goals.BR Guest has grown to just 26 restaurants, and As attendance soars, Museum of Modern Art now the clock is ticking on the partners’ future together: The fund that shoots up the ranks of city’s top cultural orgs Starwood Capital set up to underwrite BR Guest’s expansion is nearing the end of its five-year term, according to BY THERESA AGOVINO sources familiar with the deal. Starwood Capital would not con- Photographer Cindy Sherman’s provocative images, film director Tim Burton’s quirky drawings and firm details about the fund, including nude performance artists featured in Marina Abramovic’s memorable exhibit have helped the Museum its timeline, but Chief Operating of Modern Art become an ever more popular attraction for locals and tourists alike in recent years. De- Officer Daniel Yih said in an inter- mand for MoMA’s shows has become so overwhelming that the museum announced last month that view, “We typically exit investments it will be open seven days a week instead of six, starting next spring. [in] five to 10 years.” He added that Attendance at the midtown institution has averaged nearly 3 million visitors a year, double the “we continue to assess when to exit the approximately 1.5 million visitors it hosted in 2004, when it reopened after a two-year renova- See STARWOOD on Page 19 tion. During the same period, membership catapulted to 140,000 from 30,000. ELECTRONICELECTRONIC EDITION EDITION “We were maxed out as far as our attendance, so it became an easy decision” to open seven days, said Glenn Lowry, the museum’s director, who sat in his office looking quite corporate in his dark suit, though violet socks peeking from his pant legs hinted at See HOT MOMA on Page 12 ELECTRONIC EDITION THE newsbloomberg NEWSPAPER LIST NYC’s Largest Cultural Institutions P. 13 20121008-NEWS--0002-NAT-CCI-CN_-- 10/5/2012 6:14 PM Page 1 STATS AND THE CITY AN APPLE A DAY Health care took center stage in last week’s presidential debate, while statistics released recently showed a 23% drop in the average number of visits people are making to doctors. FYICRAINSNEWYORK.COM 3.9 Average medical visits made in 2010 by 18- to 64-year-olds, down from 4.8 in 2001 For banks, the toll keeps rising 1,260 NYC women who succumb to breast ust when it seemed like the government would cancer annually never bring a big case against a big Wall Street 80.6 bank for its role in the mortgage mess, New York Life expectancy in NYC for people born J Eric Schneiderman state Attorney General stepped in 2009, up 2.9 years from 2000 forward. He hit Bear Stearns, which JPMorgan Chase 38,697 absorbed in 2008, with a civil suit alleging misdeeds Physicians working in NYC connected with Bear’s packaging of mortgage securities back in the boom. bloomberg 42.6 The case actually contained few revelations. But the NYC HIV diagnosis rate, per 100K people, in 2010, vs. 16.1 nationally AG, who’s part of a Justice Department task force looking to bring financial fraudsters to justice, is promising a whole lot more to come. How much more? Sources: NYC Department of Health and Mental Hygiene, Crain’s research, U.S. Census Bureau and “We’re looking at tens of billions” in penalties, he told Bloomberg Television last week, “not istockphoto NYS Department of Health just by one institution, but by quite a few.” LOSING ALTITUDE Last week, Bloomberg reported that the AG secured agreements with 12 banks allowing his The total number of flights coming through NYC-area airports has been office to continue its investigations past a deadline. Charles Peabody, a banking analyst at Portales descending since the spring. Partners, estimated it would cost JPMorgan $3 billion to settle. Citigroup, Bank of America and +8.5% y-o-y change Goldman Sachs say they have already set aside sufficient reserves for such mop-up ops. Still, banks have a way of underestimating the cost of resolving these sorts of messes, as BofA +4.2% +1.7% did before agreeing to pay $2.4 billion to settle a suit alleging that it misled shareholders about its +0.1% -2.4% -1.3% -3.3% acquisition of Merrill Lynch. In short, as eager as banks may be to move on from the 2008 crisis, the sins of the past continue to bite. —aaron elstein 1/12 2/12 3/12 4/12 5/12 6/12 7/12 Source: Port Authority of New York and New Jersey TEMP’S RISING ON SICK LEAVE. A big struction crews on the MTA’s Long City Hall rally in support of mandat- Island Rail Road arm were arriving HOORAY! ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY ing paid sick leave and a poll showing late, leaving early and working slow- FIVE rising public support for it upped the ly—with little oversight....FEDS LOVE “GENIUS” heat on City Council Speaker Chris- CORNELL NYC TECH, TOO. The U.S. New Yorkers won MacArthur THIS WEEK IN CRAIN’S tine Quinn to stop blocking the meas- Commerce Department says it will fellowships ure.The Community Service Society set up shop at Cornell NYC Tech’s and will get a found in a poll that 83% of New York- new Roosevelt Island campus with an cool $100,000 IN THE BOROUGHS-------------------------- 3 a year for five ers favor a bill mandating paid sick eye toward helping all those techies years. IN THE MARKETS----------------------------------4 days, up 9 percentage points from a navigate their way to lucrative year ago. But a business coalition patents, federal grants, etc. And in- THE INSIDER -----------------------------------------------6 fighting the mandate insists it re- stead of waiting for the campus to BUSINESS PEOPLE ---------------------------7 mains steadfastly opposed. Mean- open in 2017, it has already dis- CORPORATE LADDER --------------------8 while,Public Advocate Bill de Blasio, patched a staffer to the school’s tem- OY VEY! a likely opponent of Ms.Quinn in the porary digs at Google’s local mega- FROM AROUND THE CITY -------- TIGHT 9 race for mayor, not only hammered office over in Chelsea. ... CONDOS IN BUDGETS BULK. OPINION --------------------------------------------------------10 the speaker for block- In a likely sign cause more ing the bill, he un- of continuing slug- city residents GREG DAVID--------------------------------------------11 ‘We’ve heard to eat home- veiled another meas- gishness in the city’s cooked THE LIST ---------------------------------------------------------13 ure likely to rile from too condo market, Two meals. business—a fat tax Trees Management REAL ESTATE DEALS------------------- 15 hike on the rich. … many sold the top 10 floors CLASSIFIEDS -----------------------------------------16 MTA GETS GREEN businesses: “I of its huge Mercedes NEW YORK, NEW YORK LIGHT. The state House development SMALL BUSINESS--------------------------20 The tristate area is filled with comptroller found just can’t take on the West Side for autumn adventures, from SOURCE LUNCH--------------------------------22 nice things to say it anymore” ’ $170 million.The de- ziplining through the fall about the Metropoli- veloper was building winding down, but he’s not exactly OUT AND ABOUT ------------------------------23 City Council Speaker foliage to an over-the-top tan Transportation Christine Quinn, at a press 162 condos there atop easing up on one of his signature proj- jack-o’-lantern display. P. 21 SNAPS--------------------------------------------------------------23 Authority, calling its conference on measures to its new apartment ects: improving the city’s schools. Far finances “appreciably” ease the regulatory building but opted for from it. The city has put a record 36 CORRECTIONS improved following a burdens on small a bulk sale as “an expe- elementary and middle schools on a LGBT buying power is estimated to be $790 billion in 2012. The amount was misstated rocky couple of years businesses dited route to achieve watch list for possible closure. Mean- in the Sept. 24 “Marriage equality accounts for bigger workloads.” In addition, the name of big revenue short- our exit plan with mit- while, 181 additional schools could of the firm that made the projection is Witeck Communications Inc. Its name was falls. Comptroller Thomas DiNapoli igated risk,” according to a Two Trees see a major overhaul.That total of 217 misstated in the article.

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