When Steve Wilson and Laura Lee Brown opened the 21c Museum Hotel in Louisville in 2006, they thought it’d be the only one.
“They had the idea for 21c and the passion to make 21c a reality to help revitalize downtown Louisville,” Craig Greenberg, president of 21c Museum Hotels, said in an interview with Insider Louisville. “Based on the response that other guests gave us, we decided to become a brand management and development company and do more 21c hotels in other communities and help revitalize other downtowns.”
Now, there are six 21c Museum Hotels in the United States, with a seventh under construction in Nashville and two in development. Thus far, they’ve done it with their own capital, federal historic tax credits, state funding and help from friends and small investors.
With no thoughts of slowing down, Wilson, Brown and Greenberg sought out and found a major investor to help them expand more rapidly and make the jump into larger markets, where the cost of doing business is higher, but so is the reward.
“We started with one, and in the very beginning, I don’t think it is any secret our friends and neighbors thought we were crazy,” Wilson told IL. “Now that we are expanding, it is exciting to think about opening more and in larger markets.”
He added, “We realize that our product is unique enough, it can stand anywhere.”
21c Museum Hotels announced on Wednesday that Junius Real Estate Partners, a subsidiary of J.P. Morgan Private Bank, has purchased a minority stake in the company, which will allow it to develop up to $250 million in museum hotel projects.
“The real estate development business is a very capital intensive business,” Greenberg said. “We wanted to find a partner who could proactively help us grow and accelerate our growth.”
Greenberg declined to say what percentage ownership Junius has obtained and how much it will invest in 21c Museum Hotels, but he said despite the change, the management team will remain the same.
“They have invested, not just in our concept, but in our team,” he said.
Junius is jumping right in. The first joint project with 21c Museum Hotels will be in Nashville, a 124-room hotel with more than 10,500 square feet of art exhibition space, an upscale restaurant and spa. The Nashville museum hotel, which is set to open in the first half of 2017, is in the historic Gray & Dudley Building, 221 Second Ave. N.
The real estate investment company also will be involved in the planned 21c Indianapolis and 21c Kansas City, both of which also will be located in historic buildings in city centers. Junius will collaborate on the big picture, such as helping identify cities for new 21c museum hotels and deciding whether to move forward with a project, Greenberg said, but not in the day-to-day operations.
With Junius as an investment partner, Wilson said, 21c Museum Hotels could move into Miami, St. Louis, the New York region, or even Cuba. The latter is a dream for Wilson, who said he’s worked with Cuban artists before.
The backing from Junius also will allow 21c Museum Hotels to develop projects in cities that “aren’t that interested in helping people get started.” In some cities, the company has received funding or incentives from the city because officials are trying to spur economic development downtown. In larger cities, the downtowns already are developed.
Within the next five years, Wilson expects to have 10 21c’s open in the United States, but the growth won’t stop there.
“I say we’re going to have more than 21 — the magic number,” he said. “It is just exciting to be able to be growing a company at 68 years old.”
What’s more, 21c Museum Hotels will be able to accomplish the projects from its headquarters in Louisville, Greenberg said.
“One of the things that brings us the most pride is the ability and opportunity to develop our company from Louisville,” he said, adding that more than 200 of its more than 1,000 employees are based in Louisville, and that number will continue to grow.
Junius brings to the table both the necessary capital and experience in the hotel business. Individuals within the company have hospitality experience, and Junius as a company purchased, renovated and resold 17 Marriott hotels. In 2015, it bought the 696-room Hooters hotel-casino in Las Vegas with partner Trinity Hotel Investors.
The company has invested in some other unique projects, including buying a stake in the 340-acre Salamander Resort & Spa in Virginia and partnering with developer Domvs London on The Park Bel Air, a three property Los Angeles subdivision in which the homes and land are expected to cost nine figures.
Now, 21 Museum Hotels is placed among those investments.
“We have been thoroughly impressed by the quality and passion of their team to deliver meaningful, innovative and authentic guest experiences while having a positive impact in the local communities they serve,” Richard Gomel, partner and senior investment officer at Junius, said in a news release. “Their strong brand, combined with their solid operating platform, have yielded attractive investment returns and enhanced real estate values. We look forward to participating in the growth of this special company.”