VEGAS -- The
Hard Rock Hotel, a pop icon in Las Vegas with its signature
neon guitar and concert venue, The Joint, has been sold
to New York-based Morgans Hotel Group for $770 million,
Hard Rock founder Peter Morton said Thursday.
sale, pending regulatory approval and other conditions,
includes the 647-room hotel and 30,000-square-foot casino
on 17 acres at Paradise Road and Harmon Avenue, 24 adjacent
acres that were planned for a hotel-condo expansion and
related intellectual property.
will receive about 95 percent of the net proceeds from
the sale and said he doesn't plan to develop any other
properties in Las Vegas, gaming or otherwise.
taking my chips off the table," Morton said from
his Los Angeles office. "Vegas is a great town. I've
got great people working at my hotel, and the community
has been phenomenal. We tried in our own small way to
make a contribution. We brought some rock 'n' roll to
Joint turned Las Vegas into a popular music scene destination
with performances by such acts as the Rolling Stones,
Bob Dylan, Neil Young, Coldplay, Norah Jones, David Bowie,
Elvis Costello and Nine Inch Nails.
built the Hard Rock in 1995 for $80 million and expanded
the property in 1999 with a beach club and swimming pool
that became one of the hottest party spots in town. It
was chosen as one of the top 10 pools in the world by
the Travel Channel. Other Hard Rock attractions include
Body English nightclub, Nobu restaurant and an 8,000-square-foot
spa and fitness center.
Hard Rock is already an extraordinary landmark and we
are pleased to be able to acquire a property that has
so much expansion potential," Edward Scheetz, president
and chief executive officer of Morgans, said in a statement.
"Since Las Vegas is the largest hotel market in the
U.S., it is key for our growth strategy. This transaction
provides us with an immediate and highly visible entry
into this market."
said the Hard Rock will complement Morgans' existing collection
of hotel brands, which include Morgans, Royalton and Hudson
in New York; Delano and The Shore Club in Miami; Mondrian
in Los Angeles and Scottsdale, Ariz.; Clift in San Francisco;
and Sanderson and St. Martin's Lane in London.
I assume is they're buying the Hard Rock brand because
they went public recently and they need recognition,"
said Jim Stuart, principal of Las Vegas-based Centra Properties,
a joint venture partner with Related Cos. in the Las Ramblas
project on Harmon. "Strategically, it's a logical
move for Morgans because their growth mechanism is they
buy a brand."
which closed down 7 cents at $17.95 a share Thursday on
the Nasdaq National Market, is known as a boutique hotel
operator targeting a younger demographic.
hotel, along with our established and renowned Delano
and Mondrian brands, will allow us to dominate the Las
Vegas market at multiple price points by offering the
style, innovation and service with which our brands are
synonymous," Scheetz said.
which was founded by Studio 54's Ian Schrager, also has
an agreement with Boyd Gaming to build a 600-room Delano
and 1,000-room Mondrian hotel at Echelon Place, planned
for the current site of the Stardust on the Strip.
have high regard for their company and we're very excited
about their involvement in the Echelon development,"
Boyd spokesman Rob Stillwell said. "They're coming
into Las Vegas in a big way."
Wall Street analysts who wouldn't comment on the record
because of conflicts said Morgans has wanted to enter
the Las Vegas market for some time and that the Hard Rock
fits with its mode of operation. It was only a question
of reaching terms, especially on price, since Morton wanted
at least $750 million.
Rock Hotel reported earnings of $45 million before interest,
depreciation, taxes and amortization last year, but because
it's privately held, nobody knows to what degree there
may be excess expenses, said Jane Pedreira, a gaming analyst
for Lehman Bros.
said the hotel was selling somewhere between nine times
and 12 times its EBIDTA multiple, depending on how you
value the 24 acres. She ran numbers from $10 million to
$15 million an acre.
don't know if they're linked to just the hotel or can
they use the Hard Rock name on other hotels," she
said. "In the grand scheme of things, it's not a
lot of money, rather than buying a Strip property and
imploding it. You're not talking multiple billions of
dollars. And it still fits with their trendy market niche."
part that intrigues Pedreira the most about the Hard Rock
sale is the gaming license. Morgans would have to go through
the licensing process or contract with a casino operator,
would be unusual to give away the upside of a gaming license,"
cofounded the Hard Rock brand in 1971 and sold his chain
of Hard Rock cafes to the Rank Group for $410 million
been involved with the Hard Rock for 35 years," Morton
said. "I just think it's a great time to sell. There's
a lot of liquidity out there. As you know, the market
is at a peak right now and I got a great offer. I just
sort of felt there came a point in my life where I wanted
to do more with my life and re-evaluate things. I want
to do some different things."
Frank, principal of Edge Resorts, which is developing
the W Las Vegas hotel at Harmon and Koval Lane, said he'd
heard Morgans' name tossed around as a possible suitor
of the Hard Rock, but it wasn't one of the names he heard
Rank Group also was one of the unsuccessful bidders for
is great news for the Harmon corridor," Frank said.
"We're happy to hear it. We've got a strong partner
at that end of the block. We're trying to create a boutique
environment and Morgans brings that."
has stayed at Morgans, Delano and Mondrian and said they
combine the hotel and nightlife that will contribute to
the overall young, hip vibe that's coming to the Harmon
corridor. Like the W and other hotel brands around the
world, Morgans realized they had to be in Las Vegas, Frank
acquisition will be financed with cash on hand and Morgans'
corporate line of credit, as well as a $700 million loan
from an affiliate of Credit Suisse.
Associated Press and Bloomberg News contributed to this