Press Room

Seattle Times - Fairmont Hotels & Resorts Acquires Four Seasons

Safeguard a Seattle Icon

Wednesday, August 13, 2003

By Mike Kunath

Guest columnist

Special to The Times

Seattle's Olympic Hotel, the oldest remaining building in the University of Washington Metropolitan Tract, continued its meandering trek through history this month. On Aug. 1, management of the hotel passed to the Fairmont Hotels & Resorts group of Toronto, Canada.

What do we know about this young, rapidly growing chain? More importantly, what do they know about one of Seattle's icons?

In 1861, the Denny, Terry and Lander families donated a 10-acre site for a new university. In 1895, the UW relocated its main campus to the present 583-acre Montlake site and the Board of Regents debated selling the downtown tract (it was listed for $250,000) or possibly developing a park.

Fortunately for Seattle, the regents retained ownership. In December 1924, the "grand dame" began a brief reign as Seattle's finest hotel and the center of social life. Tradition was born and an icon was in the making.

Beginning with Herbert Hoover, every U.S. president has occupied the presidential suite. However, the Depression took its toll, and the operator of the hotel, like many in the period, went into bankruptcy. An era had ended.

In 1953, the UW regents made two significant decisions. They agreed to demolish the aging Metropolitan Theatre, around which the Olympic was wrapped, and approved a new 100-year ground lease.

The new operator was the Western Hotel, later the Westin chain, which in 1979 sold its interest to JMB Realty of Chicago. JMB Realty entered into a management contract with the Four Seasons Hotels group. After two years of renovations, the hotel secured an AAA Five Diamond rating, which to this day is the only one in the Pacific Northwest.

Last year, JMB Realty attempted to break the management agreement with the Four Seasons and sought bids for the ownership of the building for 37 more years. Despite a competing bid from a group of local investors, which included the Four Seasons, JMB entered into a sales agreement with a real-estate investment trust and the Fairmont Hotels chain at the end of last year. Thus ended the second great period for the grand dame.

Under the stewardship of the Four Seasons, old traditions had been maintained and new ones begun. Former general managers Peter Martin and Brian Flaherty had recognized that in order to be successful, they had to become involved in the community. Equally important, they maintained a Five Diamond rating, which helped ensure that national clients would include Seattle in their travel plans.

Like the Four Seasons, the Fairmont is a management company. Today the Fairmont Hotels chain includes 15 properties in the United States, 21 in Canada, and six in the Caribbean and Mexico.

Fairmont's decision to ask Dennis Clark to become the general manager of the new Fairmont Olympic Hotel shows promise. Clark is an experienced operator with family ties to Puget Sound. To his credit, the Fairmont has retained most staff and ensured that all received length-of-service credit.

However, it appears from its Web site that the Fairmont has only one other "Five Diamond" property in its stable, the Fairmont Scottsdale Princess. Other rated properties have been given three or four stars.

In an economic environment such as today, where occupancy rates are far below normal trends, most operators will attempt to reduce expenditures and/or take market share from competitors with lower room rates.

In addition, the natural tendency will be to withdraw from the many community commitments begun by the Four Seasons. This would be a mistake. Seattle is a very giving community and in order to maintain the hotel's preeminent position, much less a premier rating, the new management team must realize that these activities go with the turf, in good times and bad.

These issues bring us back to the university regents and their role. They must realize that the Olympic is Seattle's core icon and that its revitalized grand-dame status and five-star rating must be retained. Lose either of these and we, and subsequent generations, will suffer.

Under the terms of the Four Seasons management agreement, the hotel operators had to report to UW Board of Regents on an annual basis. Thus far, the regents have decided not to publicize these reports, possibly because they are simply financial summaries. However the regents, or their metropolitan tract committee, now have the opportunity not only to review financial results, but to set some operating standards, ensure future capital commitments are made, and most importantly to report on an annual basis to the citizens of our city.

A set of standards would demonstrate a commitment to a vision. The regents might consider asking a few well-intentioned citizens, free from conflict, to help draft operating standards for the grand dame and report to the university and the community at large on an annual basis.

This may appear a bit radical. It's a new concept, and probably hasn't been tried before. But then, most everything about the metropolitan tract and the Olympic Hotel is unique. Had a similar strategy been pursued with many other urban icons in the U.S., they would not find themselves in their current state of disarray.

Mike Kunath is a principal in the Seattle-based investment management firm of Kunath Karren Rinne & Atkin and an active participant in the community. He was a member of the local investor group that bid on ownership of the Olympic Hotel.

The Olympic Hotel is not the oldest remaining building in the University of Washington Metropolitan Tract, as stated in the Aug. 13 guest commentary, "Safeguard Seattle icon." The Cobb Building is.

To read this on the web, visit: http://community.seattletimes.nwsource.com/archive/?date=20030813&slug=kunath13

King 5 Television - Principal Jeff Atkin on Holiday Shopping 2008

Holiday Shopping 2008

Thursday, November 13, 2008

SEATTLE - It’s six weeks until Christmas, and while the decorations are starting to go up around town, shoppers are feeling less than festive.

“Can't afford it. Can't afford to take the risk. I've just recently let my family know that nobody's getting gifts,” said Jamie Byrnes of Seattle.

So business leaders are asking property owners to help spark the holiday shopping spirit by lighting up more parts of downtown.

At least 10 major buildings have signed on, including the massive U.S. Bank Center. All are planning to light their properties in holiday colors. Others are expected to join in.

And the feel-good tactic is spreading. In downtown Bellevue, developers plan to spend more than $1 million on their annual snowflake lane display, adding dozens of new costumed characters and snow making machines. Business people hope it will be music to the ears of gloomy shoppers, inspiring them to spend more.

“It's very important. When people are happy they'll enjoy it more. They'll be out enjoying it more, buying gifts, remembering people on their lists,” said business manager Bente Jensen.

But analysts are skeptical of the plan. They say the pretty decorations may draw people downtown but it will likely end up economic window dressing.

“Not an environment where people want to do a lot of shopping, feel good about shopping, feel good about credit to the same extent that they have,” said retail analyst Jeff Atkin.

The lights are expected to come on shortly after Thanksgiving.

(By Eric Wilkinson/King 5 News)

Puget Sound Business Journal Opinion Piece - Mike Kunath

Are sovereign investment funds the new economic model?

Premium content from Puget Sound Business Journal by Mike Kunath

Sunday, November 9, 2008

The Western financial system, as we know it, is dead. Not tarnished or cracked. Dead. With its demise go the Anglo laissez-faire financial mechanisms of the Reagan-Thatcher-Kohl era that have held sway for nearly three decades. The American subset, affectionately referred to as “the cowboy experiment,” run by self-centered eccentrics, is at the root of this collapse. After all, New York, not London, had been the creator of new financial products, strategies and entities. We were the innovators. Leverage was the tool. And greed was the measure of success.

It make take years for the damage to be unwound. As world economies deflate with the burst of the credit bubble, nations are ratcheting through a massive deleveraging process, shifting risk from the private to public sector. We must unwind the massive credit bubble created by a system of risk and reward strategies built upon false assumptions, in which the rewards of self-indulgence trampled good judgment. It’s a world economy, and thus a world problem.

In the period of sharp deflation that we are going through, for example, the commodity-dependent emerging economies are only just beginning to feel the consequences. Some will undergo debt defaults, others will endure national bankruptcies. Iceland is a now defunct economy that was run by several extraordinarily leveraged would-be hedge funds disguised as commercial banks. Keep an eye on Turkey, South Africa, many Eastern Bloc countries and Vietnam as you seek emerging market returns.

As the financial ship recovers, the question becomes, what financial system will the world adopt to replace the broken U.S.-centered model? Four similar systems are emerging. Each has at its core a partnership between private (business) and public (state) interests. Two, Russia and China, emphasize the public interest while Brazil and India stress the private. Call it a socialist model, or whatever you want, the West will move in this direction, creating a fifth variation.

The new Western model already is being tweaked by various public partners. In suggesting a public-private partnership, Gordon Brown of the U.K. and Nicolas Sarkozy of France are both ahead of the curve by realizing that debt deflation, which resulted from excessive global liquidity and leverage, must be tackled on a multinational basis, and that giveaway programs are expensive and marginally effective. They understand the urgency, but not yet the new model.

In the U.S., “bailouts” are un-American, but political leaders still cling to them. Neither President Bush nor the presidential candidates understood this. They and Congress pandered to voters with colossal giveaway programs. The tax rebate last spring, the $25 billion loan guarantee to the auto industry and the $700 billion bank bailout — all were pure handouts with no investment return required.

Such giveaways are, or should be, history. Treasury Secretary Henry Paulson is beginning to give shape to the new public-private model. He took $250 billion of that $700 billion and bought equity in major banks with the caveat that the public sector have a share in ownership and insisted upon compensation restrictions on CEOs. In short, he wants a return on his investment. He expects to be proactive, help determine macro strategies, and provide oversight. It’s the beginning of a new model, a model of partnership.

We have an opportunity, possibly a need, to create domestic “sovereign funds,” newly conceived entities that are based upon active management and profit sharing between public and private entities. To date, the sovereign fund concept has been implemented only by foreign governments with excess reserves that are seeking investment returns greater than U.S. Treasury bonds. But just suppose our government changed its habit of “spending money” and began to focus on “investing money.”

Congress might place $50 billion in a new sovereign fund and use it to provide capital to a broad array of participants in the nuclear energy industry, formed as a consortium to build several new facilities. Although the public would provide most of the funding, the deal would require private industry — contractors, design firms and others — to put up funds as well. And the government would expect not only to get its capital back, but to earn a fair return. Sovereign funds could build highways, bridges, fresh-water conservation projects, even sports stadiums.

Sovereign funds could help with another looming problem: the rapidly growing gap between government expenses and falling revenues. The city of Seattle could enter into an agreement with the state of Washington and the federal government to form a sovereign fund with a consortium of businesses to fund a solution to the Alaskan Way Viaduct mess. Local voters would be more likely to approve a one-time tax for investment purposes.

To view this article on the web, visit: http://seattle.bizjournals.com/seattle/stories/2008/11/10/editorial7.html?surround=etf

Seattle Times - 2007 Markets, First Quarter

Saturday, March 31, 2007

2007 markets, the first quarter | A turbulent time, but stocks recover

By Drew DeSilver

Seattle Times business reporter

Was it worries over the nation's housing recession and the unraveling of the subprime mortgage industry? A stray comment by former Federal Reserve Chairman Alan Greenspan that resonated around the world? Rising oil prices that stoked inflation fears? Or just a bull market that had grown long in the tooth and was due for a pullback?

Market watchers gave all of those reasons for the sharp drop in stock prices in late February and early this month, ending a climb that began last summer. Though stocks gained back much of that ground, the major market indices ended the first quarter more or less where they started, with either small gains or small losses.

"It's kind of a Rip Van Winkle effect," said Andrew Loechl, a principal at Seattle's Eagle Harbor Asset Management. "If you fell asleep in January and woke up today, you wouldn't think much had happened."

Friday's market activity encapsulated much of the turmoil of the entire quarter, as stocks rose, dropped and then recovered.

The Dow Jones industrials rose 5.60 points, or 0.05 percent, to 12,354.35, after rising 67 points and falling 106 earlier in the session. The Dow ended the quarter down 108 points, or 0.87 percent; that was the index's feeblest performance since the second quarter of 2005.

Broader stock indicators were mixed. The Standard & Poor's 500 index lost 1.67, or 0.12 percent, to 1,420.86, and the technology-dominated Nasdaq composite index rose 3.76, or 0.16 percent, to 2,421.64.

But the markets' small net change masked considerable volatility, and a closer look reveals how different sectors fared.

If, as many economists say, the United States is approaching the end of the current expansion, you'd normally expect the best performers to be large-capitalization stocks and "defensive" issues — those that are less sensitive to the ups and downs of the business cycle.

But the large-cap Standard & Poor's 500 index was up just a smidge in the quarter, while S&P's mid-cap index gained 5.5 percent. And while defensive sectors such as energy, health care and consumer staples did gain, the top-performing sector was basic materials, driven by double-digit gains in construction materials and metals stocks.

Though the big deals grab most of the headlines, much of the recent spate of merger and buyout activity has been among midsized companies, said Jeff Atkin, a principal at Kunath Karren Rinne & Atkin, a Seattle-based investment management firm.

Suppliers of building materials have benefited from nonresidential construction on everything from office towers to highways, he added. And despite the deflating housing market, new-home construction rose more than expected last month (though declines in building permits portend slower times ahead).

But stocks also rose and fell for reasons that had little to do with the broad economy. The premier local example was Dendreon, a Seattle biotech whose stock had traded in the $4-to-$5 range for more than a year, until Friday.

Nearly all of Dendreon's 210 percent gain for the quarter came on its last day, after the company's drug for prostate cancer moved a big step toward gaining regulatory approval.

Less spectacular was Weyerhaeuser, whose stock at one point was up nearly 22 percent since the start of the year. But much of that rise was due not to investor optimism about the fundamentals of the wood-products business, but speculation that the Federal Way-based company was about to convert itself into a REIT. That hasn't happened — yet — and after a couple of brokerage downgrades, the stock began moving back down. Still, it closed the quarter up 5.8 percent.

Despite hand-wringing by some that overregulation was hurting the competitiveness of U.S. securities markets, interest in initial public offerings continued to be strong. Seventy-four companies announced IPOs in the quarter, up from 66 in the same period last year. And 66 companies completed IPOs on U.S. markets, versus 55 a year earlier.

Only one Northwest company was among those selling stock for the first time, but it was a doozy: Kirkland-based Clearwire raised $600 million in its March 7 offering, making it the largest IPO of a Washington-based company since AT&T Wireless in 2000. Since then, however, Clearwire has lost 18 percent, closing out the quarter at $20.47.

Despite the choppier waters, the fundamentals are still in place for continued stock-market gains, said Peter Glidden, regional president for Harris Private Bank in Seattle.

Interest rates continue to be relatively low, Glidden said, making stocks look like better investments. Corporate profits are still rising, though many expect the growth rate to slow when first-quarter results start coming in a few weeks. And billions of dollars of liquid cash are still flowing around the world, looking for a home.

"2007 could turn out to be a lot like 2006," he said, noting that despite several steep dips last year, the S&P500 still finished with a double-digit gain.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com

Philanthropy - Hurricane Katrina - Mike Kunath

Quiet Katrina effort offers lesson

Puget Sound Business Journal by Mike Flynn

September 12, 2005

While it turns out that the Seattle area and Washington state may not be needed as hosts for large numbers of evacuees from the Gulf Coast hurricane disaster, a lot of the backroom discussion and planning for the welcome of Hurricane Katrina victims could have some local benefit in the future.

And part of that local benefit could be a greater focus on the fact that this area is ill-prepared to experience a disaster of the scope of Hurricane Katrina -- and that the earthquake on which disaster would ride into this state, rather than a hurricane, "wouldn't offer us three days notice," as one official put it.

Certainly the dollars being committed by businesses and individuals, as well as by the state with its "Washington Cares" fund established in partnership with Washington Mutual Inc., will certainly help make a difference. As Gov. Christine Gregoire noted, "money is the primary need."

When the Federal Emergency Management Agency advised the state Sept. 7, after the state had revved up plans to host up to 2,000 evacuees, that evacuees would not be coming to Washington in significant numbers, all the plans for handling the personal needs of storm victims were put on hold.

Little noted but important closed-door meetings took place last weekend among business people and executives of city departments and the staff of Mayor Greg Nickels. The aim was to map out an ambitious Seattle response, but this was before the state asked the mayor to set aside any local planning for evacuees in the face of a coordinated state effort.

In acquiescing to Gregoire's request, we hope Nickels doesn't forego the opportunity to use the effort on behalf of the evacuees of the Gulf Coast to focus attention on the fact the Seattle area needs to draw a lesson from New Orleans in terms of being prepared for a natural disaster.

"We're no better prepared than New Orleans was, in many ways," one local official told us.

Mike Kunath, principal with the investment counseling firm Kunath Karren Rinne & Atkin, whose efforts to spur a Seattle response to the personal needs of evacuees led to the series of weekend meetings, noted that "there was value, even if was merely understanding the need for a citizens' organization that could help us better respond to our own potential catastrophes."

In addition, there's an opportunity for the mayor and elected officials to help frame the reality by reminding voters that if the effort to repeal the gasoline tax enacted by the 2005 Legislature succeeds in November, we could be helping to set up Seattle for a disaster like New Orleans, should the seawall and Alaskan Way Viaduct collapse in an earthquake.

Part of the rationale that Kunath brought to his effort was pragmatic. His intention was to induce the public and private sectors to join in mounting what he described in his working document as "a prepared response organizational structure" to the needs of the evacuees, who he envisioned would be living in Seattle in large numbers.

He suggested the need for both the public and private sector leadership to "recognize that the Puget Sound area may have a need for such assistance in the future" and that thus caring for the victims by hosting them here might have a very practical, as well as humanitarian, value.

It turned out the outreach by Seattle to host up to 5,000 evacuees didn't congeal into a plan to host those Gulf Coast homeless, first because the state asked Seattle to step aside, and second, because FEMA turned out not to need this state as a large-scale host.

But the need to examine our own abilities to cope with a future natural disaster here remains.

To read this story on the web, visit: http://seattle.bizjournals.com/seattle/stories/2005/09/12/editorial2.html?surround=etf

Philanthropy - Celebrity Waiter Fundraiser - Mike Kunath

'The Gang' serves its 20th lunch

Puget Sound Business Journal by Mike Flynn

Thursday, May 13, 2004

The nation's most successful Celebrity Waiter fund-raising luncheon turns 20 Friday, and "The Gang" of nine local business people who organized the first one were to be honored at the splashy, carnivalesque luncheon at the Fairmont Olympic Hotel in Seattle.

The Leukemia Society has been the beneficiary of this fund-raising luncheon and auction from the outset, and this year's goal is to have the 300-plus attendees raise $400,000 during the couple of hours of fun and bidding.

"This is the world leader of raising money for leukemia research," enthuses Dick Friel, one of the nine originals. He and his wife, Sharon, make this a regular stop on the list of charity auctions for which they serve as auctioneers throughout the year, and he's been doing that from the outset of the event.

"The original concept was just a room full of celebrities dressed in tuxes acting as waiters at what was basically a high-priced lunch for leukemia," Friel adds.

Mike Kunath, principal in the portfolio-management firm Kunath, Karren, Rinne & Atkin, and another of the originals, recalls that the first event "raised about $15,000."

Kunath says that the early events involved business and community "celebrities," "mostly men," dressed in tuxes without their jackets on, but he adds that "about the third year, I came dressed as a waitress and the guys decided I was a poor substitute for the real thing."

"As a result, two things happened," says Kunath. "First, we began having women celebrities, and, second, the idea took hold of the waiters all dressing up in some sort of costumes, eventually inviting their table guests to take part in the theme."

"It became clear that the crazier the better was the rule," says Friel. "We decided the room had to be the theater, not what was happening on stage."

Asked about memorable auction items, both Friel and Kunath recalled the time Phil Smart Jr., another of the founding nine, put up for auction what they recall as "a first-of-its-model Mercedes sports car for which delivery was several years after order, but we had one available right then."

As Kunath remembers, "Mike Bledsoe (another of the nine) advertised nationally that the car would be available at auction at the Celebrity Waiter event, then he set up phone lines so out-of-area bidders could participate in a live auction for one hour. The car went for a fortune."

Most major cities have a celebrity waiter event to benefit leukemia, but "they pale next to ours," boasts Kunath. "Most are pretty formal and don't raise more than about $50,000."

While many local business, political and community leaders have attended and spent money at one or more of the Celebrity Waiter luncheons over the years, about half of the waiters and table guests are annual returnees, according to Friel, who, as auctioneer, has the opportunity to look out over the crowd for familiar faces each year.

Those who will be honored Friday for their two decades of commitment, in addition to Bledsoe, Friel, Gene Juarez, Kunath and Smart, are Dave Andrews, Ron Neubauer, Jim Rutherford and Brooks Whittle.

I asked Juarez, the successful operator of the chain of salons and spas that bears his name, to sum up his purpose in being involved over the years, to which he said: "It has a noble purpose and represented an opportunity to collect friends that I knew to be high achievers and work with them on a common cause while having a lot of fun doing it."

To read this on the web, visit: http://seattle.bizjournals.com/seattle/stories/2004/05/17/editorial2.html?surround=etf

Puget Sound Business Journal - Fairmont Olympic Hotel - Mike Kunath

Four Seasons eyes major project

The downtown Seattle development could include a hotel, condos and retail

Thursday, August 7, 2003, 9:41am PDT

Jeanne Lang Jones

Staff Writer - Puget Sound Business Journal

After losing Seattle's venerable Olympic Hotel, Toronto-based Four Seasons Hotels & Resorts could have another development within a block of the five-diamond historic hotel it managed for more than 20 years.

Four Seasons and a group of local investor partners are planning a major, $100 million-plus mixed-use hotel development in downtown Seattle, similar to Four Seasons projects in other cities across the country.

Along with a luxury hotel, "We'd like to do a mixed-use retail/residential project like we've done in Chicago, San Francisco, Boston, Miami and various cities," said Four Seasons vice president of corporate planning Peter Hodgson.

"Maybe we would do some office space," Hodgson added. "There is not a cookie-cutter approach."

Four Seasons' development in San Francisco includes a 277-room hotel, 142 luxury condominiums, a 100,000-square-foot sports club and spa, and 105,000 square feet of retail and restaurant space. In Miami, the hotelier combined a 222-room hotel with 186 condos, 84 condo/hotel units, a 40,000-square-foot sports club, 10,600 square feet of retail shops and 200,000 square feet of office space.

What Four Seasons does here will depend on which site it ultimately selects and the types of development local market conditions favor, but Hodgson said the project "could easily be over $100 million."

The hotelier and its investment partners would like to find a site in the downtown core near the financial district with good proximity to restaurants, stores and theaters -- one "possibly with good view corridors," Hodgson said.

The Four Seasons group has been site shopping ever since losing its bid last month to purchase the former Four Seasons Olympic Hotel building and leasing rights to rival Toronto-based Fairmont Hotels & Resorts.

Despite the monthslong negotiation over terminating its long-term management contract, Four Seasons seems now to have few regrets.

"It was a more appropriate hotel for their chain," Hodgson said. "What you will find when we come back to Seattle is our hotel, will be much smaller and will be more high-end."

Hodgson said the new hotel would be designed to have larger guest rooms than what is now called the Fairmont Olympic Hotel, Seattle, as well as more luxurious bathrooms and a much larger spa and health club.

The expectation is that it, too, would receive the American Automobile Association's top rating of five diamonds. Only 130 properties -- less than one-third of 1 percent of the 42,000 hotels and restaurants reviewed for 2003 -- received the five-diamond award for superior service, facilities and amenities.

One possibility: Redeveloping the block occupied by Rainier Tower and Rainier Square that lies between Fourth and Fifth avenues and University and Union streets. The property is part of the University of Washington's Metropolitan Tract and is managed by Unico Properties Inc.

Unico CEO Dale Sperling confirmed the Rainier Tower block is one of the properties being perused by the Four Seasons group. The potential mixed-use project might fit well with plans for the site, which at one time called for a hotel.

"Our vision for the Metropolitan Tract is to make sure this is the five-star location for all the food groups -- entertainment, retail, commercial, hospitality and residential. We want this to be the keystone block for downtown Seattle," Sperling said. "Four Seasons would be an ideal fit in that scenario."

A new Four Seasons on the Rainier Tower block would put the hotelier just across the street from the Fairmont Olympic.

Unico is part of a group of local investors partnering with Four Seasons in its new venture. Other local backers include: Former Seattle Mayor Paul Schell; Columbia Hospitality Inc., a Seattle-based hospitality consulting, management and development company; Bruce McCaw, whose family sold McCaw Cellular Communications to AT&T; Madrona Investments managing partner Tom Alberg and colleague Greg Terry, a former Perkins Coie attorney and former board member of Mandarin Oriental Hotels; and Mike Kunath, a principal in the Seattle-based investment firm Kunath Karren Rinne & Atkin Inc. California-based American Realty & Financial also is participating in the venture.

Columbia Hospitality CEO John Oppenheimer said Seattle can support a new high-end hotel under the Four Seasons flag.

"Four Seasons is a different product," Oppenheimer said. "The vast majority of their hotels are four- and five-diamond properties. Fairmont does a great job, but this is their second five-diamond property."

Additionally, the majority of Four Seasons' business is from business and financial customers rather than convention-goers or leisure travelers, Oppenheimer said.

It likely will be three to five years before Four Seasons returns to the Seattle market, given the length of time needed to secure a site, then plan and permit a major mixed-use project, Oppenheimer added.

"Our time frame is to do it as soon as possible," Hodgson said. "The essential thing is we are committed and want to return to the city with a unique high-end property. We really will know much better a year from now what and where."

Puget Sound Business Journal - Four Seasons - Mike Kunath

Hotel investor group isn't finished

Puget Sound Business Journal by Mike Flynn

Friday, July 11, 2003

The group of local business leaders who failed in their bid to buy the Olympic Hotel may have seen a good investment opportunity, but more importantly they seem to have had a genuine focus on bringing ownership and control of the nearly 80-year-old luxury establishment home to Seattle to preserve the Four Seasons brand and five-star status.

The Toronto-based Four Seasons, which was 20 years into a 60-year management contract to operate the Olympic, was a committed investor and partner with the Seattle group that lost out in its bid to buy the hotel.

But it's a business tie that might not be over with the changing of the guard at the Olympic.

In fact, the investor group is now in discussion with the Four Seasons about a possible downtown Seattle location for a new hotel, according to one member of the group.

As the announcement of the $100 million sale of the Four Seasons Olympic to Legacy Hotels and the turnover of management to Fairmont Hotels and Resorts was being made last week, it was accompanied by clear signals from Toronto-based Four Seasons that it would be looking for another local hotel to carry its top-rated-hotel image.

And as the names of those who were part of the group seeking to return the Olympic Hotel to its local-ownership roots started to become known, some began to talk openly about the fact they would like to explore the possibility of moving the Four Seasons partnership forward now with a new-hotel plan.

But most of those investor-group members emphasized that they want the Olympic to remain a top-of-the-line hotel, even after it becomes the Fairmont Olympic.

"The Olympic was built in 1924 by 100 local business leaders who felt Seattle deserved a top-of-the-line hotel," said John Oppenheimer, president and CEO of Columbia Hospitality and one of the business leaders in the investor group.

"The same thing brought about this effort -- a group of business people who cared enough to try to preserve the Four Seasons Olympic for this community," he added. "We want that quality to continue, even if it can't be under local ownership."

It's an interesting group that came together in this effort, and it could reunite if Four Seasons makes a run now, or in the future, at a site in Seattle.

Former Seattle Mayor Paul Schell, who with Oppenheimer disclosed his involvement with the investor group last week, owns several prestigious inns on Puget Sound, including at two Langley and at Port Ludlow that are managed by Oppenheimer's firm.

Another member is Bruce McCaw, who with his brothers made his fortune with McCaw Cellular Communications and its eventual sale to AT&T.

Among others in the group are Tom Alberg, managing partner of Madrona Investments, who has made investments in several hotels; Greg Terry, a former Perkins Coie attorney, part of Madrona and a former member of the board of Mandarin Oriental Hotels; and Mike Kunath, principal with the Seattle investment firm Kunath Karren Rinne & Atkin.

Unico Properties, which manages the Metropolitan Tract of University of Washington-owned property in downtown Seattle (including the land on which the Olympic sits), is also part of the group, as well as California-based American Realty & Financial, which would have handled debt placement.

A number of others who wished not to be identified were also involved and assumedly would emerge again in the future if Four Seasons sees another opportunity here, now or in the future.

The Four Seasons Olympic is the state's only five-diamond hotel and has held that distinction continuously since its major renovation in 1982. Although some in the industry view the designations as "political as hell," having a five-diamond hotel is apparently important for a city's status as a convention and upscale travel attraction.

To read this on the web, visit: http://seattle.bizjournals.com/seattle/stories/2003/07/14/editorial2.html?surround=etf

Seattle Times - A Tough Time, Even for Pros

A TOUGH TIME, EVEN FOR PROS

Sunday, October 1, 2000

Greg Heberlein

Seattle Times Business reporter

The bad news is that after nearly a straight-up decade of mining gold on Wall Street, investors are plucking pyrite.

The good news? The days of fool's gold may be subsiding. The investment community is heading into its most profitable time of the year, if the calendar has any value. The month of October usually is a winner (despite horrific moments in 1929 and 1987). Then comes the mother lode: November, December and January, the three best months.

Toward year's end, investors--especially big institutional players such as banks, mutual funds and insurance companies--like to gild their portfolios with the best market names. That enhances buying of many of the marquee stocks.

The buying euphoria often carries into the new year, as investors flood pension funds and other investment pools with fresh cash.

That may not assuage some who have lived through one of the worst six-month market periods in recent memory. Remember December, when the Nasdaq composite concluded three months with a 48 percent gain? Investors may be excused for suddenly finding such halcyon times bittersweet in the face of this year's losses.

For the quarter, indexes were mixed. The bellwether Dow Jones industrial average, despite a spate of weakness at the end, eked out a gain of 2 percent in the latest three months, up 202.66 points to 10,650.55.

But the Nasdaq, the benchmark for many technology investors, lost 7 percent (thanks to a 13 percent September swoon), off 293.29 points to 3,672.82.

Both indexes were battered in September, the Dow off 5 percent, the Nasdaq down 13 percent.

Charting regional stocks for the quarter, The Seattle Times Northwest index fell 7 percent, off 77.00 points to $1,078.50. Among 215 stocks tracked by The Times, 93 rose, 120 fell and two were unchanged. The WM Group Northwest 50 of 50 stocks weighted by their regional economic impact gave back 0.2 percent, off 18.67 points to 8,016.62.

Other major indexes: Standard & Poor's 500, off 18.12 points, or 1.2 percent, to 1,436.48; New York Stock Exchange Composite, up 21.22 points, or 3 percent, to 663.04; American Stock Exchange Index, off 8.60 points, or 1 percent, to 927.30.

Because it was a tough quarter to make a buck, and an exceedingly tough quarter to float a new stock, the new offerings that did emerge were hardy survivors that populated the top of the quarterly performance list. (Four new issues in the latest quarter vs. five the previous quarter, six the quarter before that, and eight in that off-the-chart fourth quarter last year.)

The quarter's top two stocks were newcomers. Advanced Power Technology of Bend, Ore., a maker of power semiconductors, popped out at $15 a share Aug. 8 and wound up at $33.13, up $18.13, or 121 percent. Eden Bioscience appeared for trading only Wednesday. Priced at $15, the Bothell-based plant-technology company hurtled $18, or 120 percent, higher to $33.

Rosetta Inpharmatics imprinted a similar success story, pricing at $14 Aug. 3 and ending at $27.89, up $13.89, or 99 percent. Rosetta, a Kirkland company, captured the wave in genomics. Its specialty is making equipment and software to analyze genetic information.

The fourth initial public offering was lower on the performance list, beginning its trading just 10 days ago. TTM Technologies of Redmond provides manufacturing services for printed circuit boards. Priced at $16, the stock finished the quarter at $23.50, up $7.50, or 47 percent.

Before getting to other top quarterly performers, here are the best Northwest stocks over longer time periods: nine months--Cell Therapeutics, up 853 percent; one year--the same, Cell Therapeutics, up 2,864 percent; five years--Immunex, up 3,563 percent.

High-technology stocks faced the brunt of summer selling. But there were exceptions. Pixelworks, based in Tualatin, Ore., near Portland, makes semiconductors that enable display of broadband content on electronic devices. That stock, public in May at $10, doubled in the quarter, up $24.94, or 110 percent, to $47.69.

Although retail-oriented stocks were boxed around, two fashioned outstanding quarters. Cutter & Buck, the Seattle-based sportswear maker and retailer, skipped $4.50, or 57 percent, to $12.44. Portland's Columbia Sportswear tacked on $19, or 71 percent, to $45.88.

Cutter & Buck had been much higher, at $25 on the last day of 1998. It swooned, partly because it diverted money to its retail concept. But with insiders buying, modestly improving results, investors betting against the stock forced to buy it to square their positions, and because there isn't a lot of stock out there, the stock has shown some life, said Jeff Atkin of the Kunath, Karren, Rinne & Atkin investment-management company in Seattle.

Columbia Sportswear profited from its own financial improvement and struggles of some competitors, Atkin said.

Cell Therapeutics, a Seattle biotech and the best regional stock over the past 12 months, raised more than $110 million shortly before quarter's end. Since biotechs dine on cash at healthy paces to fund research and development, the latest infusion was a positive. The stock gained $36.06, or 118 percent, to $66.69.

Although Microsoft etched big news in the last week of the quarter, getting its appeal of its antitrust case headed for the appellate level, Boeing was the consistent big winner in the battle of the Northwest's Dow-industrials components. Like a herd, securities analysts became more and more convinced the aerospace giant's production schedule was hitting on all cylinders, and the order book was filling up.

So Boeing, the dog of the Dow in 1998, suddenly became the darling, hitting a series of record highs. In the third quarter, Boeing vaulted $20.94, or 50 percent, to $62.75. A beneficiary was Portland's Precision Castparts, which makes engine castings and other airliner parts. Precision stock zoomed 70 percent, up $15.75 to $38.38. Despite a brief rally last week, Microsoft still fell $19.69, or 25 percent, to $60.31. It hit a series of 20-month lows last week.

Boise's Morrison Knudsen, the giant construction company, changed its name to Washington Group International. That didn't hurt the stock, which bounced $4.19, or 58 percent, to $11.44.

Safeco sacked its chief executive--it still is looking for a replacement--and saw its stock price magnify 37 percent, up $7.38 to $27.25. Safeco is a Seattle insurance company with a major financial-services and mutual-fund arm.

Numerous dot-com stocks dotted the bottom of the charts. The list included: Primus Knowledge Solutions, off $30.19, or 67 percent, to $14.81; N2H2, off $2.50, or 50 percent, to $2.50; Loudeye Technologies, off $10.63, or 61 percent, to $6.81; and Cobalt Group, off $3.38 or 49 percent, to $3.50.

In July, InfoSpace agreed to buy Go2Net. The former is a Redmond data provider for Internet companies. The latter is a prominent Seattle Web-site operator controlled by Microsoft co-founder Paul Allen. Wall Street hated the deal. InfoSpace lost $25, or 45 percent, to $30.25. Go2Net picked up $3.95, or 8 percent, to $54.27.

Investment bankers were busy deal-making in the quarter. The biggest ever for the region was Deutsche Telekom's bid of about $50 billion for Bellevue's VoiceStream Wireless. VoiceStream ended almost dead even, off 23 cents to $116.06.

In other deals, John H. Harland bought Oregon's Concentrex, the former CFI Proservices, for about $140 million; Plum Creek Timber ponied up $4 billion for Georgia Pacific Timber; Chiron plucked PathoGenesis for $700 million; Umpqua Holdings agreed to merge with southern Oregon neighbor VRB Bancorp; Exelixis bid $68 million to buy Portland's Agritope; and Upgrade International said it would pay about $17 million for Pathways Group.

In addition, InterWest Bancorp changed its name to Pacific Northwest Bancorp and moved from Oak Harbor to Seattle.

And Sunshine Mining, founded 116 years ago, was delisted from the New York Stock Exchange and filed for reorganization under Chapter 11 of the federal Bankruptcy Code.

All that glitters is not gold--or silver, in Sunshine's case.

Information from Bloomberg News is included in this report. Greg Heberlein's phone number is 206-464-2267. His e-mail address is gheberlein@seattletimes.com.

Boston Business Journal - Jeff Atkin

Basement's new chief seasoned in Chapter 11

Boston Business Journal by Donna L. Goodison, Journal Staff

Date: Monday, June 19, 2000

WELLESLEY--It appears Alan R. Schlesinger should feel right at home with Filene's Basement Corp.

The 57-year-old Schlesinger--named to take over the troubled Wellesley-based company that was purchased by Value City Department Stores Inc. in March after a Chapter 11 bankruptcy protection filing last August--has plenty of experience with ailing retail companies.

Although he's an unknown among local retail industry observers, Schlesinger has made a name as a turnaround specialist on the West Coast, even though he was unable to save the company he ran for the last five-and-a-half years.

"He knows his ins and outs of Chapter 11 and turnaround situations," said Dick Outcalt, a principal with Outcalt & Johnson Retail Strategists LLC in Seattle.

"It would seem to us that he's a terrific candidate for Filene's Basement. He's been through lots of storms. He's been a survivor. He's regarded as a hard-nosed, turnaround retailer. He was brought into Lamonts originally because it was a tough situation."

Schlesinger was chairman, president and chief executive officer of Lamonts Apparel Inc., a retail company based in Kirkland, Wash., during a period in which the family clothing chain twice filed for Chapter 11 bankruptcy protection. A U.S. Bankruptcy Court last month approved the sale of Lamonts' real estate assets, and the company now is liquidating the inventory of its 38 stores in Alaska, Idaho, Oregon, Utah and Washington.

Neither Schlesinger nor Value City officials returned phone calls for this story.

The publicly traded Value City of Columbus, Ohio, last week named Schlesinger as the new president and chief executive officer of Base Acquisition Corp., the Value City subsidiary that now operates the Basement's 17 stores. Schlesinger starts Monday, succeeding Samuel J. Gerson, who, by mutual agreement with Value City, resigned from the position he held since 1984.

Before joining Lamonts, Schlesinger held senior merchandising positions at Macy's, May Department Stores Co. and Ross Stores Inc. The Newark, Calif., Ross chain began in 1982 and now has 378 off-price Ross `Dress for Less' Stores that sell name brand and designer clothing and footwear.

"He basically invented the Ross format," said J'Amy Owens, president of the Seattle-based Retail Group Inc., a retail branding, design and consulting firm. "His particular skill set and expertise in discounting, particularly women's apparel discounting, is legendary. It seems to me he certainly has a letter sweater in that category."

Schlesinger was brought in to turn around the publicly traded Lamonts in November 1994, and the company filed its first Chapter 11 petition two months later.

"I would say that business has been a challenge for well over 10 years due to a lack of capital," said Jeff Atkin, an investment analyst with Kunath Karren Rinne & Atkin Inc. in Seattle. "They've always been skinny."

In an October 1996 interview with Washington CEO magazine, Schlesinger referred to the bankruptcy proceedings as a "humbling experience."

During the three years of the company's Chapter 11 restructuring, Schlesinger eliminated $90 million in debt and secured new financing. He closed 19 stores and realigned Lamonts' unfocused merchandise mix of branded, moderately priced clothing to concentrate on casual wear aimed at Northwest consumers. Home accessories also were added to store shelves.

The company emerged from Chapter 11 on Jan. 31, 1998, only to find itself again filing for Chapter 11 this past January due to capital and liquidity restraints. The company cited weak spring and summer sales as a result of unseasonably cool weather, and higher than anticipated costs associated with Y2K and the installation of new cash registers.

"I think they chose the second (Chapter 11) to get out of some leases that were choking them--a not so uncommon phenomenon for retailers," Outcalt said.

Despite sales of $209.6 million, its highest in four years, Lamonts posted a $4.5 million net loss for the fiscal year that ended Jan. 30. It listed $110.7 million in assets and $104.4 million in liabilities, in addition to $40 million in trade payables and accrued expenses.

Although Schlesinger was unable to keep Lamonts out of the hole, Outcalt and other Seattle-area retail specialists said they'd be hard-pressed to blame him for the company's demise.

"Lamonts has been so capital-strained that they've never had a chance to do a good job," Atkin said. "It's been a tough niche in that they were getting caught between discount stores moving up in price and department stores moving down in price."

According to Owens, Lamonts was a "poor man's J.C. Penney" that got squeezed by Target Corp. and the Gap Inc.'s Old Navy stores.

"Target got hip and suddenly living low was living large," she said. "It (Lamonts) literally fell out of favor. Alan kept that thing on life support for seven years. He truly kept a dead concept alive longer than it should have been."

To read this on the web, visit: http://www.bizjournals.com/boston/stories/2000/06/19/story4.html?page=all