Morgans Hotel Group Successfully Refinances London Debt In Full

NEW YORK, July 15 /PRNewswire-FirstCall/ -- Morgans Hotel Group Co. (Nasdaq: MHGC) ("MHG"), the operator and 50% owner of the London joint venture that owns Sanderson and St Martins Lane, today announced that it has successfully refinanced in full the mortgage debt secured by the hotels with a new loan maturing in July 2015.  The old loan was scheduled to mature in November 2010.  

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% 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% in local currency as compared to the same period in 2009.

About Morgans Hotel Group

Morgans Hotel Group Co. (Nasdaq: MHGC) is widely credited as the creator of the first "boutique" hotel and is a continuing leader of the hotel industry's boutique sector.  Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico.  Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. 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 MHG's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and other documents filed by MHG 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 MHG 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.