A likely sale of the Plaza Hotel would mark one of the shortest ownership reigns of an iconic Manhattan property ever. But the “nightmare” crisis facing Mumbai-based Sahara Group, which bought the Plaza last November, made the offering all but inevitable.
As we wrote Monday on nypost.com, Sahara is trying to sell the Plaza, the Dream Downtown Hotel and London’s Grosvenor House. The Times of India, citing three sources close to the situation, reported that Sahara has already received a $1.6 billion offer from an unidentified Mideast group.
Sahara, led by mega-billionaire Subrata Roy>, bought a 70 percent stake in the Plaza just last November from Israeli-owned Elad for $600 million. It also bought the Dream Downtown from Vikram Chatwal’s Hampshire Hotels for $200 million. In 2010, it bought Grosvenor House from Royal Bank of Scotland for $726 million.
ut, “Almost from the day Sahara bought the Plaza, they had financial and legal problems outside the US,” said a New York hotel industry insider who was surprised they’d gone largely unnoticed here.
Sahara is under siege by Indian securities regulators who said the company sold $4.8 billion in bonds in violation of national laws, and by Bank of China which holds nearly $1 billion in debt on the three properties.
Sahara’s woes have been widely described as a “$5 billion nightmare” in India and in Europe. But New York coverage has focused on Sant Chatwal’s Hampshire Hotel Management’s heavily publicized contract to run the Plaza’s Oak Room, Oak Bar and Palm Court — a deal Elad made before the sale to Sahara. Hampshire has tapped famed chef Geoffrey Zakarian to oversee the project.
The Plaza is managed by Fairmont while Hampshire continues to manage the Dream Downtown, but there’s no telling what effect a change of ownership might have on either company’s role.
CBRE Hotels vice-president Bradley Burwell, a hotel sale broker not involved in the Sahara offering, said both New York inns were doing well on the operating level. He noted that Sahara had smartly consolidated the several ownership entities which Elad had carved out of the hotel — including condo units for each of the restaurants and the subterranean food hall — “into a single ownership entity.”
Burwell wouldn’t predict what the new owners would do, but said he would “assume” they’d want to operate the Plaza their own way — possibly with new management.
A different hotel industry source noted, “I’m sure Chatwal had ambitions to one day displace Fairmont as operator of the Plaza” — and now both will be working for new bosses.
That source noted, however, that Fairmont has a safety blanket in that Saudi Prince Al-Waleed, a minority owner of the Plaza, is also part-owner of Fairmont.
The Plaza has 280 guest rooms, many fewer than the original 800 after Elad converted much of the building to luxury condo apartments. The Dream Downtown has 315 rooms.
A rep for Sahara said Tuesday morning the company has “only received an offer for Grosvenor House. An offer doesn’t essentially mean that the properties are for sale. In fact, Sahara is looking for more acquistions internationally.”
A Fairmont rep said, “Fairmont has a long-term management agreement with the Plaza Hotel, and we are not involved in any potential sale discussions and as such do not have any further details.” Chatwal didn’t get back to us.