Morgans Investor Rambleside to Offer $507 Million for Hotels

Updated on
  • Plans to bid for Hudson in Manhattan and Delano South Beach
  • Criticizes hotel company's `snail's pace' of strategic process

Real estate investment firm Rambleside Holdings is offering to buy two Morgans Hotel Group Co. lodging properties for about $507 million in cash to speed up efforts to maximize shareholder value.

Rambleside, owner of about 4 percent of Morgans stock, said it’s prepared to bid $313 million for Manhattan’s Hudson Hotel and $194 million for the Delano South Beach in Florida, unencumbered of management contracts, according to a letter to the hotel company’s board released in a statement Monday.

Morgans, which manages nine high-end hotels in North America, said last year it hired Morgan Stanley to explore strategic alternatives, including a possible sale. The New York-based company in August was close to an agreement to merge with Sam Nazarian’s SBE, two people with knowledge of the discussions said at the time. Rambleside criticized that potential deal and what it called Morgans’s “blatant disregard” for timely action to preserve shareholder value.

“We are outraged at the snail’s pace of the strategic process over the last 18 months in one of the hottest markets for hotel and hotel management company transactions and valuations,” Gregory Cohen, chief executive officer of New York-based Rambleside, said in the letter.

Shares of Morgans, whose chairman is Howard Lorber, climbed 7 percent to $4.31 Monday. They have declined 45 percent this year.

Rambleside also urged Morgans to sell its management business, which is worth more than $200 million, according to the letter. Rambleside said it’s prepared to step in and buy the whole company if Morgans fails to act on the recommendations or find a higher offer for the hotels.

Robyn Nentwig, a Morgans spokeswoman with Sard Verbinnen & Co., declined to comment.