A billionaire Saudi prince and a Singapore-based hotel chain have reached a tentative agreement to buy a controlling stake in the Plaza Hotel, further reducing Donald Trump's role in what was once one of his favorite trophies.
Prince Alwaleed bin Talal bin Abdulaziz al Saud and CDL Hotels said Tuesday that they will spend $28 million to renovate the hotel over the next two years and inject another $75 million to pay down a portion of the hotel's $300 million mortgage within three years. The partners would not disclose the percentage of the hotel each will own.
The deal is subject to approval by the consortium of banks, led by Citibank, that has controlled the Plaza since 1993, after Trump was unable to make loan payments. The transaction is expected to be completed in June. Trump purchased the hotel for $425 million in 1988 from Texas oilman Sid Bass.
"CDL Hotels, Prince Alwaleed and Mr. Trump have joined together in a strategic partnership with the banks to move forward on a sound financial footing to own, manage and take full advantage of all the potential at the Plaza," said Abe Wallach, a Trump executive.
As part of the deal, CDL and the prince have guaranteed to pay not only the back interest on the mortgage debt, but also an unspecified "preferred return" to the bankers on their remaining stake. As a result, one source said, some of the banks have given an initial nod of approval to the transaction.
If the deal goes through, CDL, controlled by the real estate magnate Kwek Leng Beng, will own three luxury business hotels in Manhattan. Last year, the company purchased the Millennium Hilton for $75 million and the Hotel Macklowe for $97.5 million.
San Francisco-based Fairmont Hotel Management, which is 50% owned by Prince Alwaleed, will manage the 800-room Plaza, a landmark hotel. Fairmont operates five upscale hotels in San Francisco, San Jose, Dallas, Chicago and New Orleans.
Trump, who industry analysts said has until now actively managed the Plaza's daily operations, will be "retained for certain asset-management functions" and will sit as a member of the Plaza Management Committee, according to a statement by CDL.
The other committee representatives are CDL and Prince Alwaleed.
Wallach Tuesday downplayed Fairmont's hiring as the Plaza's manager and what appears to be a diminished role for Trump. "Trump has allied himself with two of the wealthiest groups in the world on the Plaza," he said.