New York's famous Plaza Hotel is set to go on sale in an auction next month and experts believe that the five-star hotel could sell for more than $1billion.
Billionaire brothers David and Simon Reuben hold the mortgage for the storied five-star hotel and scheduled a foreclosure auction for April 26. The auction was prompted after the hotel's 75 per cent owner Sahara India Pariwar - whose chairman went to prison in 2014 for defrauding investors - defaulted on loan agreements, according to Bloomberg.
The Plaza's 282 hotel rooms, restaurants and retail shops are all for sale. The property is being sold in a package that includes Dream Downtown hotel in Manhattan's Chelsea neighborhood located a block from the High Line, a source told Bloomberg.
The Plaza, which is located at the corner of Fifth Avenue and Central Park South, also has 152 privately owned condo hotel units.
Foreign investors are pouring capital into New York hotels at a historic rate. Much of the new capital is flowing from Chinese investors. According to JLL’s hotels experts, Chinese could account for $5 billion worth of global hotel sales in 2015. And recent news about China's Anbang Insurance Group proves their interest in New York. The Chinese group has agreed to acquire Strategic Hotels & Resorts Inc for around $6.5 billion, as the owner of New York's iconic Waldorf Astoria expands its U.S. hotel portfolio.
Investors from Qatar, Bahrain, Kuwait, Malaysia and Singapore, to name a few, have also proven willing to move outside their traditional comfort zones in trophy office properties and into the U.S. hotel sector. In 2014, investors from those countries acquired seven hotel assets in New York with a total value of $1.5 billion.
Who will be the new owner? We believe that a foreign investor is likely to be the new owner of the properties.