Morgans Hotel Group Co. won extensions for loans backed by its Hudson New York hotel in Manhattan and the Mondrian Los Angeles after paying down a portion of the money owed on the two properties.
The debts now will expire in October 2011, the New York- based hotelier said. Morgans paid down $16 million of the Hudson loan and $17 million of the Mondrian debt, bringing the outstanding amount on the Hudson’s first mortgage to $201.2 million and the Mondrian’s remaining debt to $103.5 million.
Both properties are luxury hotels developed by Ian Schrager. Bookings have started to rise at luxury chains, hurt more than their cheaper competitors by the U.S. recession. Hotel occupancies in the top 25 U.S. markets climbed to 65 percent this year through August from 61 percent a year earlier, Smith Travel Research Inc. said. Luxury hotels had the biggest gain, with occupancies rising to 67 percent from 62 percent.
Morgans exchanged interest rates tied to the London interbank offered rate, or Libor, for a fixed 5 percent rate four years ago, when rates were higher, Chief Financial Officer Richard Szymanski said in a telephone interview. The loans expired in July. Morgans now pays Libor plus 1.03 percent on the Hudson loan and Libor plus 1.64 percent on the Mondrian loan. The Libor for three-month loans was 0.291 percent today.
“We got very attractive financing, which is giving us breathing room,” President Marc Gordon said in a telephone interview. “This is a culmination of a series of transactions, the result of which is that none of our debt is an issue at this time. Income in our top markets has been up.”
Mid-week rates for a standard room start at $349 at the Hudson and $345 at the Mondrian for the week of Oct. 18, according to the hotels’ websites. That’s up from $229 in May at the New York hotel and $295 at the West Hollywood, California, property.
The loans on the Hudson and Mondrian had been sent to a special servicer in May because of imminent default, according to data compiled by Bloomberg. The special servicer on both loans was CWCapital Asset Management LLC.
Rooms at the Hudson boast wood-paneled walls and floors imported from Africa. Hudson Hall, the hotel’s renovated restaurant, is reminiscent of an Ivy League mess hall with long, wooden communal tables. In the lobby, designed by Philippe Starck, ivy climbs along the 40-foot ceilings. At the Mondrian, on Sunset Boulevard, the lobby features a swing.
Schrager, the hotels’ developer, created the Studio 54 and Palladium nightclubs together with his late business partner, Steve Rubell. Schrager helped revive the concept of the boutique hotel in 1984 with the opening of the Morgans Hotel in New York.
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