Morgans and Royalton Hotels in New York to Felcor Lodging Trust $500k Per Key

Thursday, 31 March 2011 20:05

Hotel Real Estate News NYC

Morgans and Royalton hotels in New York to Felcor Lodging Trust Inc Total of $140 Million

$500,000 Per Room

(Reuters) - Boutique hotel owner and operator Morgans Hotel Group Co (MHGC.O) has reached a deal to sell its Morgans Hotel NYC and Royalton hotel in New York to Felcor Lodging Trust Inc (FCH.N), said a source with direct knowledge of the deal. The hotel purchase equates to $500,000 per key, which the Texas-based REIT has reported to the SEC is "substantially below the estimated replacement cost."

Morgans Hotel NYC 113 Rooms  Royalton hotel 168 Rooms

Earlier this week, Felcor said it will offer 24 million shares to fund a pending acquisition. In a U.S. Securities and Exchange filing, the company said it reached an agreement to buy 281 high-end hotel rooms in midtown Manhattan ( Morgans Hotel NYC and Royalton hotel )for about $140 million.

The outstanding borrowings totaled $145 million as of yesterday. Proceeds also could be used to invest in short-term, interest-bearing investments as the Manhattan deal advances or general corporate purposes. The REIT also has its eye on a hotel in Washington, D.C.'s central business district.

The Royalton and Morgans combined had 281 rooms as of December 31.Due diligence was ongoing and Felcor, a lodging real estate investment trust, said in the filing that it expects to close the acquisition in the second quarter.

Felcor Lodging Trust

http://www.reuters.com/article/2011/03/31/us-morgans-assets-idUSTRE72U5LX20110331

Office Press Release from Felcor .. http://eon.businesswire.com/news/eon/20110404005994/en/Royalton/Morgans/FelCor

About Felcor A PRESENTATION FILE -->> http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODczNzV8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

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Morgans Hotel Group Selling Marvelous NYC Hotels

Friday, 04 February 2011 07:43

Boutique hotel owner and operator Morgans Hotel Group Co (MHGC.O) is selling two of its marvelous NYC hotels. Interested buyers can keep in mind that describing these luxury hotels as 'marvelous' is not an exaggeration. The Morgans Hotel website describes their hotels as an experience with “unparalleled service in an intimate, friendly, home-away-from-home atmosphere.”

Obviously, the Morgan Group is going to praise their own properties. Yet there is plenty of feedback out there to suggest that investing in Morgans NYC hotels is a smart decision. Generally, New York City hotels are a favorite with corporate travelers - especially in a rebounding economy.

In the February 1, 2011 edition of the "Business Insider," Morgans NYC Hotel was selected as the "perfect choice for your next trip to NYC." The 'Today in the Pipeline' section highlights an excellent business hotel. The selection was based in part on the hotel's affordable rates for an expense budget, tons of amenities, and its prime location. Morgans Hotels are upscale properties in a dynamic urban setting.

The 'Business Insider' focuses on the hotel's attractions – everything from "decadent beds with down pillows and duvets" to spectacular New York City views. Bids are due this week for the two MHGC.O hotels that are up for sale. Morgans Hotel Group had been struggling under heavy debt. Boutique hotels suffered during the recession as some people saw them as frivolous choices.

For hotel buyers, the sale of Morgans Hotels means that they can pick up luxury hotels for a bargain. Of course, NYC hotels are not cheap purchases but the properties are well-worth the investment. In 2011, there is a renewed interest in luxury real estate. In addition, corporate travel is picking up again. A high percentage of business travel centers on New York City.

"Investors are interested in the luxury market in major centers such as New York. Since valuations in the upscale market fell 30% in 2008 and 45% in 2009, its return should be as impressive as the decline. Investing in a NYC hotel might just lead to a big windfall. Even if investors have to wait awhile for huge paybacks, owning Manhattan property is worth the time and effort.

As the economy improves, corporate travel numbers will rise for Manhattan. It has been proven that corporate travelers play a huge part in driving the hotel sector." ~ "Buying Hotel Growth in NYC - Investors Strategy for Growth in Manhattan Hotel Real Estate" – Domain Properties December 2010 Report

Jones Lang LaSalle Hotels is handling the sale of the Royalton and Morgans hotels for the company which had total liabilities of $801.2 million (as of November 30, 2010). According to Reuters data, its market cap is $282.2 million.

Morgans owns luxury properties in cities such as New York and Miami. Morgans' major investor is Parag Vora of investment firm HG Vora Capital. In November 2010, Vora and his partner, private real estate investment company Highgate Hotels, stated their intentions to discuss various alternatives with Morgans. With two of their NYC hotels now for sale, it is a marvelous time for buyers to invest in luxury real estate in the Big Apple.

Exclusive: Morgans to sell two NYC hotels: sources