Morgans Hotel Group Joint Venture Successfully Amends and Extends Mondrian South Beach Debt (United States)
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Morgans Hotel Group Joint Venture Successfully Amends and Extends Mondrian South Beach Debt (United States)
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Category: North America & West Indies / Carribean islands - United States - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2010-04-30
Maturity date extended for up to 7 years
Morgans Hotel Group Co. (NASDAQ:MHGC) ("MHG"), the operator and part owner of the Mondrian South Beach joint venture, today announced that the joint venture has successfully amended the non-recourse financing secured by the property and extended the maturity date for up to seven years until April 2017. Mondrian in South Beach, which opened in December 2008, is both a hotel and residences.
Among other things, the amendment allows the joint venture to accrue all interest for a period of two years and a portion thereafter and provides the joint venture the ability to provide financing to qualified condo buyers with up to 80% of the condo purchase price.
The amendment also provides that approximately $28 million of the joint venture investment in the property is elevated in the capital structure to become, in effect, on par with the lender's mezzanine debt so that the joint venture receives at least 50% of all returns in excess of the first mortgage. The first mortgage has an outstanding balance of approximately $70 million.
"These amendments and the extension highlight the confidence the lender has in this property and its long term business prospects. The lender also recognizes the critical nature of Morgans' involvement to the success of Mondrian and granted us the right to extend for a long term while accruing interest if necessary, and at the same time, allowed us to advance a portion of our investment in the capital structure so that we can earn a return sooner," said Marc Gordon, President of Morgans Hotel Group.
MHG operates the Mondrian South Beach property under a long-term management contract.
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