Buys 5 More Years
Morgans Hotel Group refinances mortgage debt
NEW YORK, NY - Unable to pay off it's mortgage loan due to mature in November 2010, the Morgans Hotel Group Co. refinanced its mortgage debt in full with the new loan maturing in July 2015. Morgans Hotel Group Co. is the operator and 50 percent owner of the London joint venture that owns Sanderson and St. Martins Lane.
The new financing is a 100 million pounds Sterling loan secured by the two London hotels and is non-recourse to MHG. The joint venture also entered into a swap agreement that effectively reduced the interest rate by approximately 100 basis points, due to the currently favorable interest environment.
"During a period where there are few new hotel mortgage loans, this financing highlights the quality of MHG's assets and reinforces our track record of securing attractive financing for our hotels. We appreciate the confidence our new lender, Aareal Bank, has shown in our London properties and our team's ability to operate them efficiently and successfully. As with our others in the recent past, this refinancing will allow us to continue to focus on delivering a truly unique guest experience and will enable us to build on the long term value and financial performance of Sanderson and St Martins Lane," said Marc Gordon, president of Morgans Hotel Group.
MHG, a 50 percent owner of the hotels through a joint venture with an affiliate of Walton Street Capital, operates Sanderson and St. Martins Lane under long-term management contracts. These hotels have experienced significant RevPAR increases in recent quarters driven by limited supply growth and improving demand. In the first quarter of 2010, RevPAR increased by 14 percent in local currency as compared to the same period in 2009.
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