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Clift Hotel from Morgans Hotel Group for $71 million . Provides Morgans Hotel Group with 99 Year Leasehold, Likely Emergence from Chapter 11 |
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| NEW YORK, July 6, 2004 - An affiliate of Morgans Hotel Group (MHG),
formerly known as Ian Schrager Hotels, has entered into a sale/leaseback
transaction on its San Francisco Clift Hotel with affiliates of Divco West
Properties, a pension fund advisor, under which Divco will pay MHG $71
million and MHG will retain a 99 year leasehold, providing MHG any profit
that might ensue from operations or a capital transaction.
Clift's plan of reorganization incorporating the sale/leaseback transaction was filed with the United States Bankruptcy Court on June 30, 2004. The plan and the transaction are subject to Bankruptcy Court approval. Approval of the plan by the court is expected to occur in September 2004. Clift's plan of reorganization provides for the satisfaction of all of the company's creditors in full. Ian Schrager, chief executive officer of the MHG, said that he was extremely pleased with the Divco transaction. "The way this deal is structured, it is basically a financing for the Clift," he said. "In addition to allowing us to emerge from Chapter 11, satisfying our lender and trade creditors, it provides for very inexpensive financing. It also provides us with the funds necessary to make improvements to the property and preserves for us the upside we feel there is in the Clift from both an operational and, should we choose to pursue it, capital transaction." Mr. Schrager said that operationally, the Clift has continued to outperform the market and is doing extremely well. "With the issues we were facing now behind us, and, the funds to make further improvements to the property, we are more optimistic than ever about the future," he said. "This is the first of what we expect to be a series of positive announcements we intend to make over the next several weeks." |
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| Contact:
Morgans Hotel Group http://www.morganshotelgroup.com |