Morgans Sells Two London Properties
Increases Liquidity by $73 Million - Company to Continue to Operate Hotels Under Long-term Management Agreements
November 23, 2011 - Morgans Hotel Group Co. (NASDAQ: MHGC) (, 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.
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