By Butch Maier
Connecticut-based Wheelock Street Capital purchased the Cavalier Hotel and affiliated properties in Virginia Beach in a massive deal—terms undisclosed—completed June 15. Cavalier Ventures, led by Gold Key | PHR CEO Bruce Thompson, retained ownership and management of the Hunt Room restaurant and Tarnished Truth Distilling Co. in the Cavalier basement. Thompson, in an exclusive interview with CoVaBIZ, discussed why he decided to sell the historic hotel he and his partners had owned since 2013.
CoVaBIZ Editor Butch Maier: When did you start thinking about selling the Cavalier, and what prompted that?
Bruce Thompson: “It was never our intent to sell the Cavalier. But the Cavalier has won so many national awards…The industry publications started talking about this being the jewel of the mid-Atlantic, 700 rooms in one place, all the meeting space, the restoration of the old hotel, the first distillery inside a hotel. The brand had featured the No. 1 Embassy Suites in the country. All the awards that the Marriott has won. And then, of course, all of the national acclaim the Cavalier restoration’s gotten. So, with that being said, there are all these brokers that deal in trophy properties, and they started coming to see us. To top it all off, this started out being something that my partners were committed to about a $35 million investment. And by the time we got through the restoration of the Cavalier that was supposed to take two years and be $35 million, it turned out to be five years and $85 million. And then the [COVID] pandemic right behind that. They ended up with over $100 million in cash in the property. And some of them are older. So, when these offers started coming in, brokers would call us up and say, ‘What if we paid you X?’ And, you know, it was just sort of like a sense, or an obligation, that I felt to try and get them back what they had after seven years of, you know, supporting and not wanting to compromise quality. I mean, there are a lot of things we could have done and not done. It was a $450 million investment, you know, as it turned out, which is about $150 million more than what we started with. And, you know, so, the brokers came. A lot of folks made offers or wanted to make offers. And both the amount of money that we wanted for the property and/or their ability to raise that kind of money, we just set all those aside until this group, Wheelock Capital, came through and said, ‘We don’t need any contingencies for financing,’ which is what everybody else wanted. ‘If we like the property, which we will do, we will pay you X.’ And X was greater than the Y that we had bought. So, at the same time, we wanted to retain some ownership, some piece. We kept the distillery, we kept the Hunt Room, and we sold them all the rest of the assets.”
CoVaBIZ: What was it about those two pieces that interested you or interested you and the partners?
Thompson: “What interested me is I think that the Hunt Room is the most nostalgic aspect of the historic hotel. The only thing that I regret is that we couldn’t have pushed it off for another nine or 10 months ’cause it’d have been the 100th anniversary of the hotel. And when you go back and look at the history of the hotel, all of the things that made us come up with the name Tarnished Truth for the distillery all sort of happened around the Hunt Room. The one that I like the best is the story of [President] Nixon stayed there all during the Watergate issue. And those 18 minutes of missing Watergate tapes are believed to have been thrown into the Hunt Room fireplace. So, I don’t know if it’s true or not, but I’ve kind of gone with the story.”
CoVaBIZ: Have you turned your attention to other assets? Do you have anything in the works right now?
Thompson: “We are far from done. We actually have two very significant contracts out to buy a couple other very, very significant properties and/or facilities that would give us plenty to do for a few years. We’re also working on a project at Port Norfolk. That will be a major redevelopment. It will be a city within a city when we get through with it….There are a lot of people that naturally assume that I was retiring, that I was getting out of the business, that this [sale of the Cavalier] was kind of an exit, and that couldn’t be further from the truth. We have sold assets before and then bought a lot more assets.”
CoVaBIZ: You’re turning 75 in December. Will that be a big day? Or are you just going to be working straight through it?
Thompson: “The big day was [a couple years ago] when, after 45 years of being single, I decided to get married—which had a little bit to do with when we decided to sell the Cavalier. [Christy] said, ‘You said you’re not going to work the rest of your life.’ I said, ‘Well, I said, ‘I’m not going to work as hard the rest of my life.’”