LOS ANGELES Pebblebrook Hotel Trust has acquired the 237-key Mondrian Los Angeles from Morgans Hotel Group Co. for US$137 million, or about US$578,000 per key.
Morgans will continue to operate the hotel under a 20-year management agreement, with one 10-year extension option. The transaction, which is expected to close in the second quarter, will generate net proceeds of approximately US$40 million for Morgans, which the company will use to help retire the US$103.5 million of outstanding mortgage debt secured by the hotel.
“This transaction further demonstrates the value of our real estate assets and our success in transitioning to an asset-light strategy,” says Morgans CEO Michael Gross. “We are looking forward to a long and beneficial partnership with Pebblebrook as we continue to manage the hotel under the Mondrian brand with a long-term management agreement. The transaction proceeds will allow us to reduce our debt and fund the continued growth of our higher margin management business.”
Earlier this month, Morgans agreed to sell its Royalton and Morgans hotels in New York City to FelCor Lodging Trust Inc. Morgans expects to generate aggregate net proceeds of approximately US$140 million from the sale of the three properties, funds which it will use to further reduce debt and provide capital for growth.
“The Mondrian name has significant potential, highlighted by the successful recent launch of the Mondrian SoHo in New York City,” Gross says. “We believe this transaction and our asset-light model will allow us to increase our investment in the development of Morgans’ key brands, including Mondrian, to accelerate their growth and expansion around the world.”
