NEW YORK CITY Morgans Hotel Group Co. has fully refinanced its mortgage debt related to its London joint venture.
Morgans, which operates the 5-star Sanderson Hotel and St Martins Hotel in London, has secured financing for its 50% ownership in the properties that extends the maturation date to July 2015. The old loan was scheduled to mature in November of this year.
The new financing is a £100 loan secured by the two London hotels and is non-recourse to Morgans. The joint venture with an affiliate of Walton Street Capital has also entered into a swap agreement that effectively reduces 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,” says Marc Gordon, president of Morgans Hotel Group. “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.”
Morgans reports that its London hotels have experienced significant RevPAR gains in recent quarters, driven by limited supply growth and improving demand. In the first quarter, RevPAR increased by 14% year over year.