Qatari group closes on $600M purchase of Plaza Hotel

Former Qatari Prime Minister HBJ held more than $400M of debt on the property that was soon to come due

Jul.July 03, 2018 01:47 PM

Left to right: Subrata Roy, Hamad bin Jassim bin Jaber Al Thani, Hamad Abdulla Al-Mulla, and the Plaza Hotel at 768 5th Avenue (Credit: Wikipedia, Katara Hospitality, and Getty Images)

Katara Hospitality, a hotel-centric subsidiary of Qatar’s sovereign wealth fund, closed Monday on a $600 million deal for full ownership of the Plaza Hotel.

News of the sale comes after three other bidding groups struggled to negotiate a deal with the Plaza’s majority owner, Subrata Roy’s Sahara Group.

But all along, Qatar’s former Prime Minister, Hassim Bin Jabber Al-Thani (known as HBJ),  owned more than $400 million of debt on the hotel that was set to mature, which likely tipped the scales in favor of the Qatari investment group.

A representative for HBJ did not immediately return a request seeking comment, and HBJ’s precise role in the deal is uncertain. British public records show that HBJ is a director of Constellation Hotels, an investment company that is also owned by Qatar’s principle sovereign wealth fund, Qatar Investment Authority.

The Real Deal reported last month that the Plaza’s minority owners, Ashkenazy Acquisition Corporation and Saudi Prince Alwaleed bin Talal’s Kingdom Holding, had been granted an extension to close on the purchase of the Plaza after going into contract in May.

But then, in a shocking reversal, the minority group opted to drop its bid and sell the 25 percent stake along with Sahara’s 75 percent stake to Katara instead of another bidder because, sources said, the sovereign wealth fund subsidiary offered greater “certainty” of closing.

Ashkenazy declined to comment, and Kingdom, Sahara, HBJ and Katara could not immediately be reached.

This is Katara’s first New York City real estate purchase. The Qatar-owned Katara, led by CEO Hamad Abdulla Al-Mulla, also owns the Savoy Hotel and the Connaught Hotel in London.

The deal was first reported in Reuters on Tuesday.

According to one source who has been in contact with Sahara on sale matters, HBJ was able to convert the debt on the Plaza into equity for the Qatar company’s acquisition, in lieu of foreclosing on Sahara. In November, Bloomberg reported that HBJ might have been planning to do exactly this kind of debt-to-equity conversion.

The current CEO of Qatar Investment Authority, which owns Katara, is also a member of the Al Thani family, Sheikh Abdullah bin Mohamed bin Saud Al-Thani.

Other investment groups who had been vying for the landmark hotel will now find themselves disappointed. Dubai-based Shahal Khan partnered with New York City landlord Kamran Hakim for a $600 million bid this spring, but were shut out when Ashkenazy and Kingdom exercised their right of first offer with a $600 million bid of their own.

Then, in June, United Capital Real Estate filed suit against Sahara claiming they went into contract to buy the Plaza all the way back in February, but were misled by Sahara, which was secretly negotiating a separate deal, according to the suit.

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