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Morgans Hotel Group Co. (MHG) announced that the Hard Rock joint venture between MHG and its equity partner, DLJ Merchant Banking Partners (DLJMB), has closed on the financing for the expansion of the Hard Rock Hotel & Casino in Las Vegas.
The financing consists of a construction loan of up to $620.0 million under the Hard Rock’s existing loan facility. Hard Rock has drawn $96.0 million for the expansion under the facility and anticipates drawing additional amounts as needed. MHG and DLJMB also amended their joint venture agreement to reflect DLJMB’s commitment to make additional capital contributions to Hard Rock of up to $144.0 million for the expansion project. In addition, up to $110.0 million will be made available by DLJMB (to the extent needed) to fund the satisfaction of minimum sales price or amortization payment requirements under the loan facility relating to the approximately 15.0 acres of excess land held for sale by Hard Rock.
Hard Rock also entered into a guaranteed maximum price contract with M.J. Dean Construction which covers the majority of work to be performed on the expansion project. The estimated total cost of the expansion project is approximately $760.0 million.
“We are quickly moving forward to transform this legendary Las Vegas property,” said Fred Kleisner, President and Chief Executive Officer of MHG. “Construction is underway and we have taken the steps to help ensure that the project is completed on time and on budget. With the expansion and other improvements to the existing facility, we are further enhancing Hard Rock’s status as the one true boutique hotel in Las Vegas.”
As planned, the new Hard Rock will have an additional 875 additional guestrooms, including an all-suite tower with upgraded amenities, approximately 60,000 square feet of meeting and convention space, and approximately 35,000 square feet of casino space. The project also includes an expansion of the hotel’s pool, several new food and beverage outlets, a new and larger “The Joint” concert hall, a new spa and exercise facility and additional retail space. Construction is expected to be completed in the second half of 2009. Recent renovations to the existing property include upgrades to existing suites, a new Ago restaurant and the new Wasted Space Lounge Bar. Other improvements to be completed in 2008 include the expansion of the Nobu restaurant and a new poker room.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
