Morgans Hotel $700 million CMBS loan expected with initial rate of Libor plus 385 bps

By Sara Rosenberg

New York, May 17 - Morgans Hotel Group Co.'s $700 million CMBS is expected to carry an initial interest rate of Libor plus 385 basis points, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

The two-year loan, which has two one-year extension options, will provide for an increase in the interest rate of 25 bps for each 90-day period during which it is not repaid or refinanced in full.

Credit Suisse is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of the Hard Rock Hotel & Casino in Las Vegas from Peter Morton for $770 million in cash.

In addition to the new credit facility, Morgans plans to use borrowings under its existing corporate line of credit and cash on hand for acquisition financing.

The transaction is subject to applicable regulatory approvals and other conditions, and is expected to close no later than the first quarter of 2007.

Morgans Hotel is a New York-based hospitality company.

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