Pebblebrook Hotel Trust has entered into a definitive agreement this week to purchase the Mondrian Los Angeles hotel from Morgans Hotel Group for $137 million according to a Wall Street Journal article. Under the terms of the deal, Morgans will continue to manage the hotel under a 20-year management agreement with one 10-year extension option. Morgans has received a $5 million security deposit, which is non-refundable except in the event of a default by Morgans. Pebblebrook expects to fund the purchase price with available cash and to close the acquisition during the second quarter.
The Mondrian Los Angeles is located on Sunset Boulevard and was originally built in 1959 as an apartment building. Reopened in 1996 after extensive renovation, the hotel is famous for its Asia de Cuba restaurant and Skybar bar and lounge.
Michael Gross, Chief Executive Officer of Morgans said, "This transaction further demonstrates the value of our real estate assets and our success in transitioning to an 'asset light' strategy. We are looking forward to a long and beneficial partnership with Pebblebrook as we continue to manage the hotel under the Mondrian brand with a long-term management agreement. The transaction proceeds will allow us to reduce our debt and fund the continued growth of our higher margin management business." Morgans has also recently agreed to sell the Royalton and Morgans hotels in New York. Reuters reported that Morgans has also been shopping the Delano in Miami.
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