NEW YORK — New owners at upscale Equinox could mean new opportunities for growth for the New York-based fitness chain.
In early December, North Castle Partners of Greenwich, CT, and J.W. Childs Associates of Boston signed a definitive agreement to sell Equinox Holdings Inc. for $505 million to The Related Companies, a New York City-based real-estate development firm that oversees a real-estate portfolio valued in excess of $15 billion. The sale is expected to close this month.
Equinox operates upscale fitness clubs in New York, Chicago, Los Angeles, San Francisco and south Florida. Harvey Spevak will continue to lead Equinox as CEO and president, and the current Equinox management team will remain intact, The Related Companies said.
Related and Equinox aren't strangers to each other. In May 2005, Related founder and CEO Stephen M. Ross was appointed to the Equinox Board of Directors. The two companies have a luxury condominium project in the works on operate a new 35,000-square-foot club. At Time Warner Center, Related serves as landlord to the flagship 40,000-square-foot club and at E, a 6,000-square-foot elite training facility — the brand's sole invitation-only private gym.
“It's a breakthrough for something close to a strategic partner buying clubs,” says Rick Caro, president of consulting company Management Vision. “Generally, we have a financial partner buying clubs.”
The companies' respective customers have similar demographic and psychographic profiles, Related said. The partnership will provide strategic opportunities for both groups. Related will secure a well-known brand as an anchor tenant for current and future developments, which will enhance the quality of its amenities and facilities available to residents. Equinox will leverage Related's real-estate expertise and relationships to more efficiently secure sites, reducing its site identification and club development costs, the companies said.
Caro agreed that the sale would mean identification of club sites that Equinox wouldn't have known about otherwise and savings in development costs due to Related's expertise in architectural engineering and site development.
Beyond that, the two companies could share marketing opportunities since Related could create packages for residents and retail owners that would make it attractive for them to join Equinox, Caro said. The two could also join in a marketing campaign with a third party, such as the BMW campaign that Equinox tried.
“We're very excited about the future of Equinox with Related as our partner,” said Spevak. “Given their expertise in the development and management of real estate holdings and their focus on lifestyle, Related will provide strategic value and facilitate the continued growth of the company.”
Since 2000 when Spevak, North Castle and J.W. Childs purchased the club company, Equinox has opened 21 new clubs in four new markets and more than doubled its membership. Revenues have grown from $63 million in 2000 to $168 million for the 12-month period ended September 2005.