The Real Deal Miami

Rambleside offers $507M for two Morgans hotels

Activist shareholder's bid includes Delano Hotel in Miami Beach

September 14, 2015 03:45PM

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Howard Lorber and the Delano South Beach

Howard Lorber and the Delano South Beach

From the New York website: Activist shareholder and Rambleside Holdings CEO Gregory Cohen is stirring things up yet again, this time offering to buy two hotels owned by Morgans Hotel Group in a move that could complicate merger talks for the lodging company.

In a letter sent Sunday to the Morgans board, Cohen said Hudson Square-based Rambleside would pay $507 million in cash to acquire the Delano Hotel in Miami Beach and the Hudson Hotel in Midtown Manhattan from Morgans.

Cohen also said Rambleside, which is “among the largest shareholders” in New York-based Morgans with around 4 percent of its common stock, is prepared to buy the entire company – though he didn’t provide details on such an offer.

Vector Group president and CEO Howard Lorber, who serves as chairman of the Morgans board, declined to comment on the letter, according to the Wall Street Journal. The hotel company was reportedly seeking $700 million last year for the two hotels.

Morgans, which owns luxury hotel brands including Mondrian and Delano, is currently in talks with hotelier Sam Nazarian’s SBE Entertainment Group on a merger that would create a company managing 19 hotels in cities including New York, Los Angeles, Miami and London. The company has explored a potential sale for a number of years.

But in his letter, Cohen suggested that a better way to maximize shareholder value would be for Morgans to sell the hotels and the management company separately — noting that “almost all of the major [Morgans] shareholders have communicated to the board, verbally and in writing, the lack of enthusiasm and disapproval of the reported potential transaction with SBE.”

Earlier this year, Rambleside also wrote to the leadership of real estate investment trust New York REIT, calling the company’s underperforming share price as “shocking” and calling for the divestment of core assets like One Worldwide Plaza. [WSJ]Rey Mashayekhi