by Michael J. Shapiro | September 15, 2015
Real-estate investment firm Rambleside Holdings, a shareholder in Morgans Hotel Group, made a public offer to purchase two Morgans properties for $507 million. The investors offered $313 million for the 834-room Hudson Hotel in New York City and $194 million for the 194-room Delano South Beach in Miami, unencumbered with management contracts.

In an open letter, Rambleside expressed frustration with the slow pace of Morgans' efforts to assess merger possibilities and increase shareholder value, pointing out that the stock had plummeted nearly 50 percent in the past year and a half. "We are outraged at the snail's pace of the strategic process over the last 18 months in one of the hottest markets for hotel and hotel-management company transactions and valuations," reads the letter. "Rather than simply maximize value for shareholders through a sale or orderly liquidation, the company has torched shareholder money on advisors, legal fees, consultants and brokers with no tangible results."

The letter went on to criticize the potential merger with SBE last month: "While shareholders are beyond the point of fatigue and frustration in this year-and-half-long 'strategic process,' this does not give the board the right to enter into a deleterious agreement that will materially undervalue OUR company and key real estate assets, while handing control over to a sub-scale, reputationally challenged hospitality operator."

The letter suggests that the Hudson and Delano South Beach be sold to Rambleside or to a buyer willing to pay more, and that the Morgans hotel management company be sold separately for approximately $200 million. Otherwise, reads the letter, "We are prepared to step in and buy the whole company at a substantial premium to the current market price and execute the strategy ourselves."