Drive Shack Inc. Announces Agreement to Internalize Management

NEW YORK–()–Drive Shack Inc. (NYSE:DS; the “Company”) announced that it has entered
into definitive agreements with its external manager, FIG LLC (the
“Manager”), an affiliate of Fortress Investment Group LLC, to
internalize the Company’s management function. In connection with the
termination of the existing management agreement, the Company will make
a one-time cash payment of $10.7 million to the Manager. The
internalization will become effective on January 1, 2018.

The transaction was negotiated and unanimously approved by a special
committee (the “Special Committee”) comprised entirely of independent
and disinterested members of the board of directors of the Company (the
“Board”), and the Special Committee was advised by independent counsel.

Sarah L. Watterson, the Company’s Chief Executive Officer & President
stated, “This is an incredibly exciting event within the Company’s
overall transformation. While the external management structure has
served the Company well for over 15 years, given the Company’s
tremendous growth plan developing and operating Drive Shack venues and
optimizing our American Golf properties, we believe shifting to an
internalized management structure today is the right move for our

Key Mechanics of the Internalization:

  • The Company’s Management Team Will Not Change. Wesley R. Edens,
    who is a Principal and Co-Founder of Fortress Investment Group LLC,
    will remain the Chairman of the Board. Furthermore, members of the
    executive team, who were previously employed by the Manager, will
    become employees of the Company, including (i) Ms. Watterson, (ii)
    Lawrence A. Goodfield, Jr., Chief Financial Officer, Chief Accounting
    Officer & Treasurer, and (iii) Sara A. Yakin, Chief Operating Officer.
    In addition, certain other professionals who previously provided
    services to the Company on behalf of the Manager will continue to fill
    similar roles as employees of the Company or its subsidiaries.
  • see The Company and the Manager Entered into a Transition Services
    . see url For a transition period, the Manager has agreed
    to continue to provide the Company with certain services and personnel
    related mainly to information technology, legal, compliance,
    accounting and tax. These services will be provided to the Company at

Key Potential Benefits of the Internalization:

  • Cost Savings Opportunity. The Company targets savings of more
    than $2 million per year following the internalization.
  • Potential for Expanded Institutional Investor Base. Following
    the internalization, the Company will have a structure that is more
    comparable to its leisure and entertainment peers.
  • Continued Manager Support and Principal Involvement. The
    Company will receive support from the Manager for certain functions
    throughout the duration of the transition services agreement.
    Furthermore, Mr. Edens, the Company’s largest shareholder, will remain
    the Chairman of the Board.

Additional details regarding the internalization can be found in the
Company’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on December 21, 2017.


Drive Shack Inc. is a leading owner and operator of golf-related leisure
and entertainment businesses.


Certain items in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements regarding the key potential
benefits of the Company’s internalization of management, including, but
not limited to, targeted savings of more than $2 million per year
following internalization, potential for expanded institutional investor
base and continued Manager support and Principal involvement. These
statements are based on management’s current expectations and beliefs
and are subject to a number of trends and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements, many of which are beyond Drive Shack’s
control. The Company can give no assurance that its expectations will be
attained. Accordingly, you should not place undue reliance on any
forward-looking statements contained in this press release. For a
discussion of some of the risks and important factors that could cause
actual results to differ from such forward-looking statements, see the
sections entitled “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in the
Company’s most recent Annual Report on Form 10-K and most recent
Quarterly Report on Form 10-Q. Furthermore, new risks and uncertainties
emerge from time to time, and it is not possible for the Company to
predict or assess the impact of every factor that may cause its actual
results to differ from those contained in any forward-looking
statements. Such forward-looking statements speak only as of the date of
this press release. The Company expressly disclaims any obligation to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company’s
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.