A New York-based activist hedge fund has set its sights on a Dallas-based real estate investment trust with the help of an unlikely ally: Vinson & Elkins, a law firm with Lone Star State roots better known for its work with Texas corporations.
The risky move by V&E to represent Blackwells Capital in its activist strategy could raise serious questions from its Texas client base as to whether the firm, which posted revenue of nearly $1 billion in 2022, remains committed to the Texas corporate community that has sustained it since its founding in Houston in 1917. Many top law firms that work with public companies are reluctant to take on work from activist hedge funds that target that same corporate client base.
Vinson & Elkins litigators sent a letter on behalf of corporate raider Blackwells Capital to publicly-held, Dallas-headquartered Braemar Hotels and Resorts making multiple unsupported claims. The letter was the first contact Blackwells had made with the hotel group since the pandemic, when Blackwells reached out to that same management team asking to enter a separate business partnership — a proposal that was rejected.
Blackwells Capital is run by Jason Aintabi, who attacked the home exercise equipment company Peloton last year. Aintabi tried to put pressure on the company by publicly criticizing its leadership and arguing Peloton should be sold off.
In its letter to Braemar on behalf of Blackwells, Vinson & Elkins also urged the company’s leadership to terminate its advisory agreement with its advisor Ashford, thereby breaching the contract, which would trigger hundreds of millions of dollars in damages at Braemar. It is unclear how this would help the shareholders of Braemar. Blackwells could have other reasons for demanding the contract breach.
Ashford’s founder and CEO, Monty J. Bennett, suggested that Aintabi and Blackwells Capital were just attempting to stir up publicity for themselves.
“Mr. Aintabi operates with family money almost exclusively. He hopes that by harassing other firms he can prove that he’s worthy of managing his parents’ money.”
“He owns only 100 common shares of record. We wish Mr. Aintabi and Blackwells would engage in constructive dialogue instead of issuing threatening Vinson & Elkins authored lawyer-letters right out of the gates,” continued Bennett.
The V&E letter has been shared with the Braemar independent board directors who are unaffiliated with Ashford or Bennett. The board will consider the letter and respond “in due course.”
The Dallas Express reached out to Aintabi as well as Vinson & Elkins representatives Chris Duffy, Keith Fullenweider, and Michael Holmes with specific questions and did not receive answers to those questions by press time.
Disclaimer: Ashford Inc.’s chairman is Monty J. Bennett, the publisher of The Dallas Express.
