Hard Rock Foreclosure

[smartone618]

Frequent Las Vegas visitor, first time poster here... saw the article in today's paper about the Hard Rock's inability to service their debt and announcement that continued deterioration in business could result in forclosure proceedings from their lender.

Anyone have any thoughts on what that might mean for operations? I know most properties got caught on the wrong side of the debt/equity ratio when the downturn hit and hopefully some refinancing/restructuring will be all that come of this, but I fear things may be worse?

I stay there once a month for a couple days a shot and love the HRH tower, the staff and everything about the place...

[ERich]

I suppose it would be prudent to clarify that the statements were made by Morgans Hotel Group which is the management operator of HRH and a 12% equity owner of the property. Morgans could potentially be stripped of management of the property by lenders should the property go into foreclosure.

They're defintely going to need to restructure their debt to make it out of this as well as get a cash liquidity boost from somewhere. Unfortunatly they got caught up in the bad timing of the economy in constructing and opening both the paradise and HRH tower. They used to command such incredible rates there on weekends which they no longer can with all of the inventory online now and tempered demand.

[Drew]

There goes the rumor on this thread about HRH being sold already:
http://forums.jackcolton.com/showthread.php?t=5565

[WarreN]

Im gonna go ahead and call out the elephant in the room...yes its true, Jackcolton/AOD is to blame for this...we raped the HRH so many times on their room rates its ridiculous!

MUAHAHAHAH!

[ame]http://www.youtube.com/watch?v=BekiE6yq0mQ[/ame]

[Andrew@LasVegasNightclubs]

I guess the old saying "where there is smoke, there is fire" applies to the Hard Rock situation. There have long been rumors coming from multiple directions regarding the Hard Rock being sold to other parties and it is obviously confirmed that they are in financial trouble. On top of that, I heard directly from a high-level source that DLJ Investments (the 87.5% owner of the property) had placed it for sale a while back.

I have a sneaky suspicion that if the gaming license wasn't part of the equation that there would have been another buyer, or at least management company, at the Hard Rock months ago. Worth noting that it took about a year for Morgan's to acquire Hard Rock from Peter Morton.

The writing is definitely on the wall for Morgan's Group.

Looking into the longterm, you have to wonder if there will be any licensing issues with whomever the new buyer is. Will the Hard Rock no longer be?

[Drew]

I guess the old saying "where there is smoke, there is fire" applies to the Hard Rock situation. There have long been rumors coming from multiple directions regarding the Hard Rock being sold to other parties and it is obviously confirmed that they are in financial trouble. On top of that, I heard directly from a high-level source that DLJ Investments (the 87.5% owner of the property) had placed it for sale a while back.

I have a sneaky suspicion that if the gaming license wasn't part of the equation that there would have been another buyer, or at least management company, at the Hard Rock months ago. Worth noting that it took about a year for Morgan's to acquire Hard Rock from Peter Morton.

The writing is definitely on the wall for Morgan's Group.

Looking into the longterm, you have to wonder if there will be any licensing issues with whomever the new buyer is. Will the Hard Rock no longer be?

Maybe an existing Vegas player would avoid those licensing issues? (not that many of them could really stomach a transaction right now...)

[Sid]

I don't see the HRH going away. Given the amount of capital already sunk into this property from lenders and the owners, I think a restructuring is on the cards.

[bobu]

Just means cheaper properties for us, so yay!

[WarreN]

I don't see the HRH going away. Given the amount of capital already sunk into this property from lenders and the owners, I think a restructuring is on the cards.

Likely.