Content area
Abstract
[Donald Trump] has reached an agreement in principle with a banking group led by Citicorp under which he will get "a substantial reduction in interest and principle" in exchange for a minority stake in the hotel, Plaza President Richard Wilhelm said.
Full text
BROWARD
NEW YORK -- Developer Donald Trump is giving up 49 percent of the luxury Plaza Hotel to bankers after he failed to raise cash by selling off suites in the building as condominiums, a hotel official said on Wednesday.
The landmark Plaza, which Trump long referred to as one of his "trophy" properties, has been struggling under the weight of some $600 million in debt.
Trump has reached an agreement in principle with a banking group led by Citicorp under which he will get "a substantial reduction in interest and principle" in exchange for a minority stake in the hotel, Plaza President Richard Wilhelm said.
Sources close to the deal said Trump`s bank debt would be cut in half.
Last year the flamboyant developer, undaunted by a weak New York real estate market, announced a plan to convert most of the Plaza`s high-priced rooms to condominiums to be sold for $450,000 to $10 million each.
Trump officials had projected the selloff could raise $760 million, which would have allowed Trump to make a neat profit. He paid $290 million for the hotel in 1988 and invested $100 million in renovations.
Wilhelm said that after careful study, officials decided that "the time was not right then or now" for such a conversion. But he said Trump hopes to go ahead with the plan when the market improves.
The Plaza, which overlooks Central Park in midtown Manhattan, has 815 units, some with as many as four bedrooms.
Wilhelm said the hotel expects to proceed with plans to build 18 luxury suites on the top three floors. Under plans announced last year, those suites were to be offered for sale for $10 million each.
Wilhelm said that despite the financial problems, the Plaza just completed its most successful February ever, with a 72 percent occupancy rate and an average room rate of $242 a night.
He also said that under the new deal with Trump`s banks, the Plaza`s operating profits will exceed its interest payments.
The problems at the Plaza are far from the only ones facing Trump, who has been scrambling to refinance his real estate and gambling empire after an aggressive expansion in the 1980s.
Over the past year, in an effort to tame his $3 billion in debts, he has had to sell or cede control of such assets as casino hotels in Atlantic City, the Trump Shuttle and his Trump Princess yacht.
(Copyright 1992 by the Sun-Sentinel)