|By Pradnya Joshi, Newsday, Melville, N.Y.|
Knight Ridder/Tribune Business News
Aug. 14, 2004 - The Plaza Hotel, Manhattan's money-losing luxury landmark, has been sold by a Saudi prince and a London-based hotel chain to an Israeli company for $675 million.
Condominium developer Elad Properties-Ad Group Ltd. -- a Fort Lee, N.J.-based subsidiary of I.T. America Israel Investment Ltd. -- may convert some of The Plaza into residential units, one person close to the transaction said, noting that a previous owner received approval to add apartments in the 1980s.
Selling The Plaza are co-owners Saudi Prince Alwaleed bin Talal -- the world's fourth richest man -- and Millennium & Copthorne Hotels Plc, which owns 92 hotels including the Millennium Broadway.
Elad, whose parent is controlled by Israeli hotel chain owner Yitzhak Tshuva, made an unsolicited bid for the 805-room Plaza, which Prince Alwaleed and partners bought from Donald Trump in 1995 for $325 million.
Friday's announced sale, at nearly $838,000 per room price, is a record for New York, according to Sean Hennessey of Lodging Investment Advisors. Yet despite its cachet and prime location on Central Park South, the 97-year-old grand dame of marquis hotels hasn't been able to escape an industrywide downturn. The hotel had a pre-tax loss of $900,000 last year, according to Millennium & Copthorne.
"We believe the decision to sell The Plaza is in line with these considerations," Millennium chairman Kwek Leng Beng stated. "It's an icon, but the price is too good to refuse," the billionaire told reporters. "The prince is very happy ... "
Elad is developing luxury condominiums throughout Manhattan, including a 50-apartment complex at 21 Astor Place and office buildings turned luxury condos at 49 E. 21st St. and at 655 Sixth Ave.
Elad president and chief executive Miki Naftali didn't return several calls seeking comment. But sources close to the deal said it's unlikely Elad would convert the entire Plaza into apartments because of its large, unionized work force, and the dominant public spaces, including lobbies and ballrooms that would be difficult to transform.
Toronto-based Fairmont Hotels & Resorts hopes to continue on as The Plaza's manager.
"We're actively engaged in discussions with the potential purchaser for a new management contract," said Emma Thompson, Fairmont's executive director of investor relations, adding that the new owners "intend to invest a significant amount of capital."
Staff Writer Alan J. Wax contributed to this story, which was supplemented with news service reports.
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