The Hard Rock Hotel & Casino is a premier destination entertainment resort located on 16.7 acres situated strategically on Harmon Avenue, one of Las Vegas' fastest growing entertainment corridors. It was built in 1995 and expanded in 1999. The property offers an energetic entertainment and gaming experience with the services and amenities associated with a boutique luxury resort hotel. The property has also been a popular music scene destination where such acts as the Rolling Stones, Coldplay, Alicia Keys, David Bowie, Snoop Dogg and Nine Inch Nails have all performed.
Features of the property include an 11-story Hard Rock Hotel tower with 647 guest rooms; a 30,000 square foot casino; a beach club with a swimming pool that was selected by the Travel Channel as one of "The Top 10 Pools" in the world; the Body English nightclub; "The Joint" concert hall; five restaurants, including the world famous Nobu; three cocktail lounges; several retail stores; and an 8,000 square foot spa, salon and fitness center.
The adjacent 23-acre land parcel, including a 544-unit apartment complex currently situated on the parcel will be held for further development. The acquisition includes the rights to use the "Hard Rock Hotel" and "Hard Rock Casino" trademarks in connection with casinos and hotel/casinos in specified locations, as well as certain other intellectual property such as merchandising and retail rights.
This transaction represents the third planned offering in the Las Vegas market by Morgans Hotel Group. The Company has already announced a joint-venture partnership with Boyd Gaming for their development project, Echelon Place, that will be anchored by two prominent MHG brands, Delano and Mondrian, which are expected to add a total of 1,600 rooms to the market in 2010.
W. Edward Scheetz, President and Chief Executive Officer of MHG, stated, "We are excited about adding the Hard Rock Hotel & Casino to our portfolio. Since Las Vegas is the largest hotel market in the U.S., it is key for our growth strategy. This transaction provides us with an immediate and highly-visible entry into this market."
He continued, "The Hard Rock is already an extraordinary landmark and we are pleased to be able to acquire a property that has so much expansion potential. We believe we can further enhance it by applying MHG's management infrastructure, marketing approach and reservations system. We also believe that the Hard Rock will complement our existing collection of brands, which have a distinctive nature, eminent design, dynamic and exciting atmosphere, celebrity guests and high-profile events, by targeting a younger demographic that still seeks a unique experience. This hotel, along with our established and renowned Delano and Mondrian brands, will allow us to dominate the Las Vegas market at multiple price points by offering the style, innovation, and service with which our brands are synonymous."
MHG may bring in one or more joint venture partners to share in the investment in the existing assets. Although the Company may use some of the excess land for expansion, it is also considering selling or establishing a joint venture partnership to develop a significant portion of it. It is anticipated that the casino will be leased to a third-party licensed operator.
The acquisition will be financed with cash on hand and MHG's corporate line of credit, as well as a $700 million credit facility from an affiliate of Credit Suisse. The transaction is subject to applicable regulatory approvals and other conditions, and is expected to close no later than the first quarter of 2007.
In connection with the transactions, Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Morgans Hotel Group.
Morgans Hotel Group announced that the Company will host a conference call on May 12, 2006 at 2:00 P.M. Eastern to discuss the acquisition. It will be broadcast live over the Internet at www.morganshotelgroup.com under the About Us, Investor Relations section. Participants should follow the instructions provided on the website for the download and installation of audio applications necessary to join the web cast. The call can also be accessed live over the phone by dialing (800) 289-0572 or (913) 981-5543 for international callers.
A replay of the call will be available one hour after the call and can be accessed by dialing (888) 203-1112 or (719) 457-0820 for international callers; the password is 4020164. The replay will be available from May 12, 2006 through May 19, 2006.
About Morgans Hotel Group
Morgans Hotel Group Co. (Nasdaq: MHGC), which is widely credited with establishing and developing the rapidly expanding boutique hotel sector, owns and operates Morgans, Royalton and Hudson in New York, Delano and The Shore Club in Miami, Mondrian in Los Angeles and Scottsdale, Clift in San Francisco, and Sanderson and St Martins Lane in London. MHG has other property transactions in various stages of completion, including projects in Miami Beach, Florida, and Las Vegas, Nevada, and continues to vigorously pursue its strategy of developing unique properties at various price points in international gateway cities in the United States, Europe, South America, Asia and around the world. For more information, please visit www.morganshotelgroup.com.
Forward-Looking and Cautionary Statements
Statements contained in this press release, which are not historical facts, are forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "projects," "intends," "believes," "guidance," and similar expressions that do not relate to historical matters. These forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, downturns in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; risks related to natural disasters, such as earthquakes and hurricanes; the receipt of applicable regulatory approvals, receipt of financing and completion of transactions and the integration of properties with our existing business; the seasonal nature of the hospitality business; changes in the tastes of our customers; increases in real property tax rates; increases in interest rates and operating costs; general volatility of the capital markets and our ability to access the capital markets; and changes in the competitive environment in our industry and the markets where we invest, and other risk factors discussed in Morgans Hotel Group Co.'s Annual Report on Form 10-K and other documents filed by the Company with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of today, based upon information known to management as of the date hereof, and the Company assumes no obligations to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized. No assurances can be given that the transactions described in this press release will be completed.