Pebblebrook buys hotel for $137 million
Morgans Hotel Group Co. has sold the Mondrian Los Angeles hotel for $137 million to an affiliate of Pebblebrook Hotel Trust. Morgans will continue to operate the hotel under a 20-year management agreement, with one 10-year extension option.
The sale price represents a value of roughly $580,000 per room. Morgans said the transaction, which is expected to close in the second quarter, is expected to generate net proceeds of approximately $40 million after applying a portion of the proceeds from the sale, along with about $6 million of cash in escrow to retire the $103.5 million of outstanding mortgage debt secured by the hotel.
“The Mondrian name has significant potential, highlighted by the successful recent launch of the Mondrian SoHo in New York,” said Morgans ceo Michael Gross. “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.”
This is the latest of several asset sales by Morgans, which is concentrating on building its management business. Earlier this month, the company unveiled a definitive agreement to sell the Royalton and Morgans hotels in New York to FelCor Lodging Trust Inc. for $140 million.
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