New York's Plaza Hotel bought for US$675 million by an U.S. investment group
AP - The owners of New York's struggling Plaza Hotel have sold it to a U.S. investment group in a $675-million-US deal. International hotel group Millennium & Copthorne said Plaza Operating Partners, in which it has a 50% stake, agreed to offload the prestigious but underperforming hotel to CPS One, an affiliate of U.S. property investment group El Ad Properties. The sale includes the adjoining property on Fifth Avenue. The other 50% of Plaza Operating Partners is owned by Saudi Prince Alwaleed bin Talal. Millennium & Copthorne said the decision to sell was made as part of a review instigated in March to improve revenue and profit opportunities for the group. The hotel's recent losses blamed on its high cost base and slower business as the U.S. economy weakens. The Plaza loss before tax for the year ended Dec. 31, 2003, was $900,000.
The invested in the hotel at June 30 a $238.2 million share of gross assets and gross liabilities of $171.3 million. "Compared with the recent earnings generated by the hotel, the sale price is an attractive exit earnings multiple," said Kwek Leng Beng, chairman of Millennium and Copthorne. He added that the group's strategy of being an owner of hotel assets remained unchanged, "especially in an improving trading environment." Millennium operates almost 100 four-star and five-star hotels in 16 countries. Its recovery is on track after experiencing a sharp fall in profitability last year linked to the SARS crisis and the Iraq war. The company expects improved profits from hotels in London, New York and cities in Asia to contribute to an anticipated annual profit of 20.6 million pounds ($40 million).