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Morgans extends non-recourse mortgage loans, reduces interest expense
By Caroline Salls
Pittsburgh, Oct. 4 - Morgans Hotel Group Co. has amended and extended its non-recourse first mortgage loans secured by Hudson and Mondrian in Los Angeles until October 2011, according to a company news release.
The company said it will have significantly less interest expense for the remaining term of the debt as its interest rate swaps on the mortgage and mezzanine loans, which expired in July, had swapped Libor to roughly 5%, whereas Libor today is less than 50 basis points.
Morgans has replaced the swaps with interest rate caps. The interest rate spreads were increased slightly to Libor plus 103 bps on the Hudson loan and Libor plus 164 bps on the Mondrian in Los Angeles loan.
"These extensions cap a long list of successful transactions that we have completed to extend and refinance debt and add liquidity and flexibility to our capital structure," Morgans president Marc Gordon said in the release.
"With the completion of these extensions, we have now extended or refinanced all significant near-term consolidated maturities and we are taking advantage of strong operating trends to drive growth across our company."
There is now $201.2 million outstanding on the first mortgage loan secured by Hudson and $103.5 million on the loan secured by Mondrian in Los Angeles.
According to the release, Morgans paid down the loan on Hudson with $8 million from cash on hand and $8 million from cash in a restricted account designated for Hudson and paid down the loan on Mondrian in LA with $8.5 million from cash on hand and $8.5 million from a restricted account designated for Mondrian in LA.
Morgans is a New York-based hospitality company.
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