DALLAS—To say that NYLO Hotels has taken its lumps during the past few years might be an understatement. Launched during September 2005, the boutique hotel chain witnessed its chief financial stakeholder, Lehman Brothers Holdings, declare bankruptcy, the global economy tank, and the second of its three open properties close because of flooding.
But NYLO is anything but dead, it’s newly named CEO said.
“Were back in growth mode and we’re going to be announcing some exciting stuff within the next year,” said Mike Mueller, co-founder, who only two weeks earlier announced a financial and management restructuring that’s breathed new life into this stylish, loft-inspired brand.
“We have completely restructured all of our debt,” he said, addressing the company’s primary concern.
Completed during December 2010, the restructuring resolved all outstanding debt obligations and provides several years of additional term and other favorable modifications. It also saw an additional investment from Lehman Brothers, NYLO’s still-bankrupt chief financial stakeholder.
“They continue to be invested in the company even following the bankruptcy,” Mueller said, adding that Lehman continues to exist and is now run by creditors.
“The biggest significant thing to change is prior to their bankruptcy, Lehman was looking to invest capital in the indefinite future to grow the company,” he explained. “Now they are and have and will invest capital to protect existing investments but not for the indefinite future and not for strategic new opportunities.”
Lehman’s bankruptcy hasn’t impacted NYLO’s strategy, Mueller said. There were few strong growth opportunities during the downturn, so Lehman was never called upon to invest in “strategic new opportunities.” Moving forward, NYLO will tap into its strong network of third-party equity partners to fund expansion.
Mueller expects NYLO to be a 50-unit brand by 2016—a tall order considering the brand only has two open properties. The third, The NYLO Providence/Warwick, closed in March 2010 after being flooded and is expected to re-open this summer.
NYLO will expand primarily through conversions until debt financing loosens. The brand’s first conversion property will be the NYLO Dallas South Side, a five-story, 76-room hotel that will pursue LEED Silver Certification.
A NYLO room in Plano, Texas.
The company also will break ground on a fifth hotel on an existing site in Overland Park, Kansas.
The ownership model will vary property by property. Growth will come by a flexible mix of management and franchising, Mueller said. The company also sees opportunity in renovating and repositioning distressed assets with some of its own capital.
“We’re looking at acquiring property to convert by ourselves with investors that we’ve identified, but we’re also working with existing owners to come in and help them from both a design and development side to renovate and reposition their hotels and then to operate them afterwards.
“We’re nimble and flexible in the arrangement and the structure in how we work with people,” Mueller added.
Mueller said growth will be opportunistic. The management team is looking for deals in all 50 states as well as Europe and Brazil. Within the U.S., however, the prime targets are gateway cities like New York, Chicago and San Francisco.
From Atlanta to Dallas
Another big change for NYLO: The company has moved its corporate headquarters from Atlanta to Dallas.
Dallas is home to several current and future NYLO projects and also boasts such advantages as a more affordable cost of living, a growing economic and easy access to markets throughout the U.S., Mueller said.
The office headquarters will be filled with a restructured management team. Mueller, who created the brand concept in 2004, will take the helm as CEO. Patrick O’Neil, an early partner in the brand, will continue to oversee day-to-day operations as executive VP of operations. Stephane Dupoux, co-founder, who oversaw all design aspects of the NYLO brand, including architectural, interior, furniture, signage and other visual identity design, will not take a bigger role. Former CEO John Russell is no longer involved with NYLO, Mueller said.