Morgans Hotel Group Closes On Sale of London Hotels
Increases Liquidity by $73 Million
Company to Continue to Operate Hotels Under Long-term Management Agreements
NEW YORK, Nov. 23, 2011 /PRNewswire/ -- Morgans Hotel Group Co. (NASDAQ: MHGC) ("Morgans" or the "Company"), the operator and 50% owner of the London joint venture that owns Sanderson and St Martins Lane, today announced that the joint venture partners have closed on the sale of the Sanderson and St Martins Lane hotels to Capital Hill Hotels Limited, a Middle Eastern investor with other global hotel holdings. The sale price for the two hotels is 192 million pounds Sterling, or approximately $300 million, and represents a value of approximately 542,000 pounds, or $847,000, per room.
Morgans' 50% portion of the net proceeds, after the repayment of debt and closing costs, is approximately $73 million. The Company intends to use the net proceeds to fund the acquisition of The Light Group as well as renovations at existing hotels and growth.
Michael Gross, Chief Executive Officer of Morgans said, "We are pleased to complete this sale and we look forward to a long and beneficial partnership with Capital Hill Hotels as we continue to manage Sanderson and St Martins Lane. With the $73 million in proceeds from this transaction, we now have approximately $150 million in total liquidity and a balance sheet capable to support growth. Coupled with our recent agreement to acquire The Light Group and strong expansion pipeline, we are making significant strides in establishing the fundamentals we need to execute our vision and extend our position as a leader in global lifestyle hospitality management."
Morgans will continue to operate the Sanderson and St Martins Lane hotels under long-term management agreements. The terms of the management agreements, including extension options, have been extended to 2041 from 2027.
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 a hotel in Playa del Carmen, Mexico. Morgans also owns, or has ownership interests in, several of these hotels. Morgans Hotel Group has other property 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 Mondrian in Nassau, The Bahamas, and a hotel in New York to be branded with one of MHG's existing brands. For more information please visit www.morganshotelgroup.com.
Forward-Looking and Cautionary Statements
This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, among other things, the operating performance of our investments and financing needs and prediction of certain future other events. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "expect," "anticipate," "estimate" "believe," "project," or other similar words or expressions. These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results or other future events to differ materially from those expressed in any forward-looking statement. Important risks and factors that could cause our actual results to differ materially from those expressed in any forward-looking statements include, but are not limited to economic, business, competitive market and regulatory conditions such as: a sustained downturn in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; continued tightness in the global credit markets; general volatility of the capital markets and our ability to access the capital markets; our ability to refinance our current outstanding debt and to repay outstanding debt as such debt matures; our ability to protect the value of our name, image and brands and our intellectual property; risks related to natural disasters, such as earthquakes, volcanoes and hurricanes; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; and other risk factors discussed in Morgans' Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and other documents filed by Morgans with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of the date hereof, based upon information known to management as of the date hereof, and Morgans assumes no obligations to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized.
SOURCE Morgans Hotel Group Co.