Aug. 13 (Bloomberg) -- Millennium & Copthorne Hotels Plc,
the owner of the Biltmore Hotel in Los Angeles, agreed with a
joint venture partner to sell the unprofitable Plaza on New
York's Fifth Avenue for $675 million. The stock rose as much as
Millennium and Plaza Operating Partners will sell the 97-
year-old hotel and an adjoining property to CPS One LLC, an
affiliate of U.S. real estate investor El Ad Properties NY LLC,
the Horley, England-based hotelier said in a Regulatory News
Service statement. The sale price is 42 percent higher than the
Plaza's book value, according to Morgan Stanley.
The premium ``is not uncommon for trophy assets like the
Plaza,'' wrote Lourens Pirenc, an analyst at Morgan Stanley in
London with an ``underweight'' rating on the stock, in a report.
The U.K. company was forced in 2001 to close for repairs its
Millennium Hilton, which was damaged by terrorist attacks that
destroyed the World Trade Center just 200 yards away. Millennium
half of the Plaza had a pretax loss of $900,000 last year, when
the U.S. was still in the throes of the biggest slump in demand
for hotel rooms since the 1930s.
Shares of Millennium rose as much as 14.5 pence to 318 pence
in London, making it the best performer on the FTSE 250 Index.
The stock was trading at 315.5 pence as of 10:24 a.m., valuing
the company at 890 million pounds ($1.6 billion).
Millennium's stock slid 28 percent in the year after the
terrorist attacks on New York.
The Plaza, which originally served as a residence for
wealthy New Yorkers after it opened in 1907, overlooks Central
Park. It's been the location for movies such as Hitchcock's North
by Northwest, The Great Gatsby, and The Way We Were, starring
Barbra Streisand and Robert Redford.
Hollywood actors Michael Douglas and Catherine Zeta-Jones
held their wedding reception at the Plaza four years ago.
It's the only hotel in New York to be designated a National
Historic Landmark, according to the Plaza's Web site. A suite at
the Plaza with a king-size bed next Friday night would cost $939,
the site showed.
Millennium and its partner, though, are selling the five-
star hotel after the Plaza lost money last year and as the U.K.
hotelier seeks to pay down debt and finance working capital.
``Compared with the recent earnings generated by the hotel,
the sale price is an attractive exit earnings multiple,'' Kwek
Leng Beng, Millennium's chairman, said in the company's
statement. Kwek is a Singapore-based billionaire who chairs City
Developments, owner of a 52 percent stake in Millennium.
Sales at Millennium's half of the Plaza last year amounted
to $58.9 million. Revenue per available room at Millennium's
properties in New York rose 18 percent in the first half of this
year, compared with growth of 22 percent for the entire hotel
market, Millennium said last week.
Room revenue, a measure based on average occupancy and room
rates, rose 4.8 percent for all of the U.S. in the week ended
Aug. 8 from the same period a year earlier, according to Smith
Millennium isn't the only British hotel owner that's using a
recovery in the hotel industry to stage asset sales; Windsor-
based InterContinental Hotels Group Plc last month said it would
sell hotels worth as much as 512 million pounds in Chicago, Miami
and other U.S. cities as it focuses on managing properties
instead of owning them.
Millennium posted a second-quarter profit of 11 million
pounds compared with a year-earlier loss of 7.9 million pounds as
a recovery from the 2003 slump in international travel
accelerated, fueling demand for hotel rooms.
The Millennium Hilton, which was insured for $322 million,
including coverage against terrorist attacks, opened again in May
The sale of the Plaza will be completed by the end of this
year, Millennium said.