UPDATE: Jefferies Color On MHGC

Jefferies, which downgraded Morgans Hotel Group Co. (NYSE: MHGC), is providing some color on the stock.

“[Our downgrade] reflect[s] the increasing risk to the company's management agreement at the Hard Rock Las Vegas, which could mitigate the benefits of capital recycling and new management contracts,” Jefferies writes.

“Hard Rock remains a noteworthy near-term risk given that the annual interest expense is approximately $48 million versus the property's current EBITDA of $25 million.”

Morgans Hotel Group Co. closed Friday at $9.29.