Morgans Hotel Group extends loans on Los Angeles properties

LOS ANGELES Morgans Hotel Group Co. has extended the first mortgage loans secured by the group’s Hudson and Mondrian hotels in Los Angeles until October 2011.

The amounts outstanding on the first mortgage loans are now US$201.2 million secured by Hudson and US$103.5 million secured by Mondrian in Los Angeles. Morgans paid down the loan on Hudson with US$8 million from cash on hand and US$8 million from cash in a restricted account designated for Hudson, and it paid down the loan on Mondrian in with US$8.5 million from cash on hand and US$8.5 million from a restricted account designated for Mondrian.

Morgans will have significantly less interest expense for the remaining term of the debt as its interest rate swaps on the mortgage and mezzanine loans, which expired in July 2010, had swapped LIBOR to approximately 5%, whereas LIBOR today is less than 50 basis points. Morgans has replaced the swaps with interest rate caps. The interest rate spreads were increased slightly to LIBOR plus 1.03% on the Hudson loan and LIBOR plus 1.64% on the Mondrian in Los Angeles loan.

“These extensions cap a long list of successful transactions that we have completed to extend and refinance debt and add liquidity and flexibility to our capital structure,” says company President Marc Gordon. “We appreciate the vote of confidence from yet another of our lenders. With the completion of these extensions, we have now extended or refinanced all significant near-term consolidated maturities and we are taking advantage of strong operating trends to drive growth across our company.”

Morgans ranks 209th on HOTELS’ 325, the annual listing of the world’s largest hotel companies that is published in this month’s issue of HOTELS.