L.A. Fitness International LLC is preparing an ambitious growth plan to consolidate its new-found position as the country’s largest fitness club operator.
The company, which now runs about 510 clubs across the country, expects to open another 225 by the end of 2014, according to William Horner, senior vice president and chief real estate officer.
Plans include about 50 new club openings this year, another 75 openings in 2013, and about 100 more the year after that, according to Horner, who spoke earlier this month at an International Council of Shopping Centers program held at the District at Tustin Legacy.
The plan would nearly double the size of LA Fitness—which ranks No. 11 on this weeks list of largest private companies based in Orange County (page 16)—over a four-year period. The company operated about 360 clubs at the end of 2010.
The growth plans also shine some light on a company that’s typically one of OC’s most tight-lipped when it comes to the size and scope of its operations.
The Business Journal estimates that LA Fitness, which is owned by a trio of private equity companies and does not disclose its sales, had about $1.1 billion in revenue last year.
The company’s plans for new centers, combined with a recent acquisition push, would appear likely to push LA Fitness’ revenues closer to the $2 billion mark by the end of 2014, if those plans come to fruition.
Bally’s Deal
Late last year the company made headlines when it paid $153 million for 171 clubs, including a large number of Southern California locations, from Bally Total Fitness.
Bally’s, which had operated about 275 clubs prior to that sale, averaged about $2 million in annual revenue per club in 2010, according to fitness club trade publication Club Industry.
San Ramon-based 24 Hour Fitness was the largest fitness center operator in the country by revenue in 2010, with about $1.35 billion from its 420 gyms, according to Club Industry’s data.
Top Spot
LA Fitness was the No. 2 operator in the 2010 ranking but looks likely to take the top spot in the trade publication’s 2011 list—which is scheduled to be published next month—thanks to the Bally Total Fitness acquisitions.
Revenue from the addition of the 171 Bally clubs, which closed in December, aren’t reflected in this week’s Business Journal private company list, which measures companies by their 2011 sales.
LA Fitness has carried over its acquisition push into 2012. Last week brought an announcement of a deal to buy more than 30 gyms from St. Petersburg-based Lifestyle Family Fitness for an undisclosed amount.
The locations all are based in Florida, according to local reports.
LA Fitness already has about 60 centers in Florida.
The company’s also building a handful of new locations in Florida, which along with Southern California is among its largest markets.
The company is continuing to take advantage of vacant big-box retail stores for the bulk of its new locations, particularly in Southern California, Horner said at this month’s ICSC program.
Recent local additions include a 63,000-square-foot Mission Viejo gym near Crown Valley Parkway and the Santa Ana (I-5) Freeway, as well as a 50,000-square-foot location at Irvine Company’s Crossroads shopping center, near Culver Drive and Barranca Parkway.
Both the Mission Viejo and Irvine locations filled space once used by defunct retailer Mervyns.
Thirty of the 34 gym locations the company now has under construction are vacant big-box sites, according to Horner.
Only a handful of the new sites going up are completely new projects.
That includes a 45,000-square-foot gym being built at the Park Place campus in Irvine, near the company’s new headquarters at The Michelson office tower.
The Park Place location, in the early stages of construction, is located amid a hub of sorts for high-end health clubs. Nearby competitors include a flagship 24 Hour Fitness location and an Equinox Sports Club.
Horner said the company’s new gym should be able to compete on price, and that the number of workers in the John Wayne Airport area should provide plenty of customers for all the gyms in the vicinity.
Private Equity
LA Fitness is majority-owned by a trio of private equity firms: CIVC Partners and Madison Dearborn Partners of Chicago, and Siedler Equity Partners of Marina del Rey.
Madison Dearborn is said to be the last of the three companies to invest in LA Fitness, paying a reported $600 million for a 20% share in the club operator, which was formed in 1984.
