Morgans Hotel Group Sells Royalton and Morgans for $140 Million (United States)
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Morgans Hotel Group Sells Royalton and Morgans for $140 Million (United States)
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Category: North America & West Indies / Carribean islands - United States - Industry economy -
Group or hotel buyout
This is a press release selected by our editorial committee and published online for free on 2011-05-24
Morgans Hotel Group Co. (NASDAQ: MHGC) ("Morgans" or the "Company") today announced that it has completed the sale of Royalton and Morgans for $140 million, or approximately $500,000 per room, to an affiliate of FelCor Lodging Trust, Incorporated. Morgans will continue to operate the hotels under 15-year management agreements with one 10-year extension option.
Morgans used a portion of the proceeds to retire its revolving credit facility. The hotels, along with the Delano hotel, were collateral for the revolving credit facility, which terminated upon the sale of the properties. Delano is currently unencumbered.
Net proceeds, after retiring the revolving credit facility and closing costs, are approximately $93 million. The Company intends to use the net proceeds for the refinancing of the debt secured by Hudson and for growth capital.
Michael Gross, Chief Executive Officer of Morgans said, "We are pleased to complete the sales of these New York hotels and we look forward to a long and beneficial partnership with FelCor as we continue to manage the hotels. With this transaction, we have now completed the sale of three assets which has allowed us to reduce our debt and provided us with financial strength to expand our brands."
On May 4, Morgans announced it had sold Mondrian Los Angeles resulting in net proceeds, after repayment of debt and closing costs, of approximately $40 million.
About Morgans Hotel Group
Morgans Hotel Group Co. (NASDAQ: MHGC) is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles, South Beach and New York, Clift in San Francisco, Ames in Boston, Sanderson and St Martins Lane in London, and hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans also owns, or has ownership interests in, several of these hotels. Morgans Hotel Group has other property development transactions in various stages of completion including a Delano in Cabo San Lucas, Mexico, a Delano in Turkey, a Mondrian in Doha, Qatar and a hotel in New York to be branded with one of MHG's existing brands.
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