X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

LAS VEGAS-Morgans Hotel Group Co. and its equity partner DLJ Merchant Banking Partners have closed on $620 million in construction financing for the expansion of the Hard Rock Hotel & Casino in Las Vegas. The loan is being funded under the Hard Rock’s existing loan facility, from which it previously has drawn $96 million for the expansion.

The partnership also entered into a guaranteed maximum price contract with M.J. Dean Construction that covers the majority of work to be performed on the expansion project. The estimated total cost of the expansion project is $760 million.

Finally, the partnership amended their joint venture agreement to reflect DLJMB’s commitment to make up to $144 million of additional capital contributions for the expansion and up to an additional $110 million to fund the satisfaction of minimum sales price or amortization payment requirements under the loan facility relating to the approximately 15 acres of excess land held for sale by Hard Rock.

“Construction is underway and we have taken the steps to help ensure that the project is completed on time and on budget,” Fred Kleisner, president/CEO of MHG says in a prepared statement. “We are quickly moving forward to transform this legendary Las Vegas property.”

The 11-story Hard Rock Hotel & Casino sits on 16.7 acres on the burgeoning Harmon Avenue corridor. The popular music scene destination was built in 1995 and expanded in 1999. Amenities include a 30,000-sf casino; a beach club; the Body English nightclub; the Joint concert hall; five restaurants; three cocktail lounges; several retail stores; and an 8,000-sf spa, salon and fitness center. The adjacent land was acquired with plans and entitlements in place for a $1.2-billion hotel expansion and condominium development. Only the hotel expansion is moving forward at this time.

The hotel expansion will bring 875 additional rooms, 60,000 sf of meeting space, 35,000 sf of retail, a new spa and a new nightclub. The new hotel rooms will come in two new 15-story towers, one on the existing casino-hotel property that will have 500 rooms and one 400-room, all-suite tower on a piece of the adjacent 23 acres that were included in the sale. The project also includes a renovation of the existing facilities including and an expansion of the casino and pool.

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. The hotel expansion is slated for completion by mid-2009.

New York City-based Morgans and DLJ Merchant Banking Partners acquired the gaming resort here early last year for $770 million. It immediately took over hotel operations but had to farm out the casino operation until it gained an operator’s license from the Commission. Morgans began operating the casino this past February.

Morgans agreed to acquire the assets of Hard Rock Hotel Inc. from Peter Morton in May 2006 and added DLJMB as an equity partner prior to closing the deal. MHG put up one-third of the acquisition equity, which is approximately $57.5 million, and DLJMB is funding the remainder, which is approximately $115 million. The remainder of the purchase price consists of a $760-million loan for the acquisition. The initial term of the loan is three years, with a possible extension of up to two terms of one year each under certain conditions.

The interest rate on the loan will be 415 basis points above 30-day Libor, subject to increase if the completion date of the expansion project is delayed and under certain other conditions. The security for the loan includes the hotel & casino, the Hard Rock Cafe property, the adjacent parcel, the intellectual property and certain reserve funds and accounts.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.