Morgans Hotel Group has announced the sale of the Sanderson and St Martins Lane hotels in London.Mobi for £192 million to Capital Hill Hotels, a Middle Eastern investor with other global hotel holdings.
MHG will continue to operate the hotels under long-term management agreements.
The terms of the management agreements, including extension options, have been extended to 2041 from 2027.
MHG and its joint venture partners will use the sales proceeds, along with cash in escrow, to retire the approximately £99.5 million of outstanding mortgage debt, which is secured by the two hotels.
Michael Gross, chief executive officer of MHG said: “Our continued management of these two great London assets and the proceeds from the sale will help provide the foundation for continued growth of our management business and brands around the world.
“We are pleased that our team will be able to continue to build on the value and financial performance of Sanderson and St Martins Lane as well as the additional capital the new owner plans to invest to enhance these assets.
“We are very excited about the extension to our existing management agreements and we look forward to a long-term relationship with our new partner.”
The transaction is expected to close in the fourth quarter and is subject to satisfaction of customary closing conditions.
The joint venture partners received a £10 million pounds security deposit, which is non-refundable, except in the event of a default by the joint venture.
MHG is a 50 per cent owner of the hotels through a joint venture with an affiliate of Walton Street Capital.