(Bloomberg)—Billionaire Saudi Prince Alwaleed bin Talal has long been associated with New York’s iconic Plaza Hotel, ever since he bought out Donald Trump over two decades ago.
But now, with the Plaza up for grabs, another royal has quietly emerged as a force who could shape the hotel’s future. And that would be Sheikh Hamad bin Jassim bin Jaber Al Thani, one of the most influential figures in Qatar.
Al Thani, it turns out, acquired the mortgage on the Plaza, the Beaux-Arts landmark on the southern fringe of Central Park. That could give him an edge as the fraught sale of the Manhattan property heats up. Alwaleed, who was put under house arrest in a sweeping crackdown in Saudi Arabia, recently sold half of his 25 percent in the Plaza to real estate developer Ben Ashkenazy. Al Thani happens to be a silent lender to Ashkenazy, who has been eyeing an even bigger stake as embattled owner Subrata Roy puts his interest on the market.
“These types of trophy hotel assets are one thing that some of these global billionaires like to collect,” said Dan Fasulo, director of Yardi Systems, which provides software and data for the commercial real estate industry. “It’s really a vanity asset to have in their portfolio.”
Just how Al Thani, who also held talks with Jared Kushner’s family business on investing in its struggling 666 Fifth Ave. high rise this year, entered the picture is complicated.
Working through a Luxembourg company, he made a set of deals that paved the way for Ashkenazy to scoop up London’s iconic Grosvenor House hotel, also owned by Roy, for roughly $750 million in July, regulatory filings show. As part of the transaction, Al Thani became the senior lender to the Plaza. That means he can apply the mortgage amount to a potential bid, and lower his upfront cost, if he teams up with Ashkenazy or decides to make an offer on his own.
(The timing also happens to coincide with the Saudi-led embargo of Qatar, but there’s no indication of any bad blood between the two royals.)
Neither Al Thani nor a representative from Alwaleed’s Kingdom Holding Co. responded to requests for comment. Ashkenazy declined to discuss the deals.
When reached by phone, Sandeep Wadhwa, head of corporate finance for Roy’s Sahara India Pariwar and president of its U.S. operations, said it had received less than 10 offers for its 75 percent stake in the Plaza and expects several more. He said neither Al Thani, Ashkenazy nor Alwaleed have submitted bids yet and didn’t foresee Alwaleed’s arrest affecting the sale. The bidding process is being run by Jones Lang LaSalle Inc.
Regardless, what’s clear is that the man that many call HBJ has become a powerful player in the world of high-priced commercial real estate.
Since at least 2015, Al Thani has held discussions about a $500 million cash infusion for 666 Fifth Ave., owned by the family business of President Donald Trump’s son-in-law, only to have those talks fall apart earlier this year. He’s also been pegged as the silent equity partner who backed Harry Macklowe’s $585 million purchase of 1 Wall St. in 2014.
A grandnephew of the founder of modern Qatar, the 58-year-old billionaire is one of the richest figures in the royal family and holds vast political sway. While serving as prime minister from 2007 to 2013, he also headed the Qatar Investment Authority, one of the world’s biggest sovereign wealth funds. Since returning to private life, Al Thani has gained a reputation as a big spender, emerging as the anonymous bidder who paid a record-breaking $179 million for Pablo Picasso’s “Les Femmes d’Alger” (Version “O”) in 2015.
In the deals with Ashkenazy, the sheikh’s behind-the-scenes role adds yet another twist to the intrigue surrounding the Plaza and the Grosvenor, whose fates have been intertwined ever since Roy bought both hotels (along with Dream Downtown hotel in Manhattan) between 2010 and 2012.
In 2014, Indian regulators sought to arrest Roy over an unauthorized bond sale. He was jailed for two years and ordered to return almost $4 billion. Since then, he has put all three hotels up for sale to raise cash. While there were numerous suitors, including Qatar’s wealth fund, prior negotiations foundered.
The big obstacle: the $1 billion in loans on the hotels, which was held by the billionaire brothers Simon and David Reuben. They came in and took over the mortgages (one on the Grosvenor and a separate one for both the Plaza and the Dream) from Bank of China after Roy fell afoul of some debt terms.
Last December, they refinanced the Grosvenor loan at an interest rate of over 12 percent, triple the original rate, and were in no hurry to cut any deals.
“We bought the debt because it was throwing off a very good yield,” said Charles Stewart-Smith, a spokesman for the Reubens.
Importantly, the loans were cross-collateralized too, so if you wanted to buy one hotel, you’d have to take over, pay off or refinance the loans for all three. Time and again, the provision proved to be a dealbreaker.
Enter Al Thani. When Ashkenazy’s firm, Ashkenazy Acquisition Corp., trumpeted the deal for the Grosvenor, a crown jewel in London’s pricey Mayfair neighborhood, as “the most significant single asset hotel deal in U.K. history” in July, the developer made no mention of Al Thani.
But regulatory documents show that Pinnacle Investments -- the Luxembourg company controlled by Al Thani and his immediate family -- provided loans backed by the Grosvenor to Ashkenazy affiliates that were created to buy the property.
In a separate filing, the mortgage on the Plaza and the Dream was transferred to GHH Holdings -- a recently renamed affiliate of Al Thani’s Pinnacle.
“Ashkenazy was able to buy the Grosvenor House and HBJ was willing to buy the mortgage” on the Plaza and Dream, said Sahara’s Wadhwa.
“There were higher bids,” he said, but Al Thani provided “a solution that no other transaction in isolation was giving us.”
When Al Thani took over the $550 million loan, he also agreed to let Sahara put off interest payments of roughly 8 percent for a year by adding them to the principal. The agreement also bars Al Thani from foreclosing during that time.
What happens next with the Plaza is anyone’s guess.
Located at the corner of Fifth Avenue and Central Park South, it’s one of the most iconic luxury hotels in America. It has been a destination for a long line of celebrities since opening in 1907, including F. Scott Fitzgerald, the Beatles and Marilyn Monroe. But in recent years, it’s been losing millions. The famed Oak Room bar and restaurant has stood empty for years, and according to some insiders, union contracts have eaten into the bottom line.
Right of Refusal
Ashkenazy, who bought half of Alwaleed’s 25 percent stake in May, gained the right of first refusal to buy the building, two people familiar with the matter said. Once the bidding closes, Ashkenazy can match any offer within 30 days.
And then there’s Al Thani, who could use the mortgage to his advantage. GHH, the Luxembourg entity that holds the loan, said in an October regulatory filing that it began to “pursue” a real estate investment in the U.S. in June and July.
Wadhwa says that Roy would be more than happy to sell the Plaza to Al Thani -- as long as the price is right.
“We have a great relationship with the lender Al Thani,” Wadhwa said. Still, “we are very neutral as to whether they buy it or someone else buys it. As long as we get the best price.”
--With assistance from Hui-yong Yu, Tom Metcalf and Erik Schatzker.To contact the reporter on this story: Miles Weiss in Washington at [email protected] To contact the editors responsible for this story: Margaret Collins at [email protected] Michael Tsang
© 2017 Bloomberg L.P