Updated: New York:
Aug 13 12:30
Aug 13 17:30
Aug 14 01:30

E-Mail This Story E-Mail This Story    Printer-Friendly Format Printer-Friendly Format

Millennium to Sell New York's Plaza for $675 Million (Update2)

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 4.8 percent.

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.

Movie Location

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.

Five Stars

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 Travel Research.

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 2003.

The sale of the Plaza will be completed by the end of this year, Millennium said.

To contact the reporter on this story:
Gabrielle Monaghan in Dublin at

To contact the editors responsible for this story:
Kimberly Kirner at; Marthe Fourcade at
Last Updated: August 13, 2004 05:43 EDT

©2004 Bloomberg L.P. All rights reserved.   Terms of Service   Privacy Policy   Trademarks
Site Map    Help    Feedback    About Bloomberg    Log In/Register    Advertising    日本語サイト