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Faith Hope Consolo
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In the News

City Set To Toast the Plaza — and Profits

When the owner of the Plaza, Isaac Tshuva, raises his Champagne flute tonight to toast the building's centennial, he will also be celebrating a less publicized fact — the billions of dollars in profit he is set to make after transforming the historic, down-at-the-heels hotel into a luxury development.

Mr. Tshuva's company, Elad Properties, acquired the building three years ago for just $675 million, and pitched a fierce battle with the hotel union and preservationists to create 181 condos, and a hotel with 134 traditional hotel rooms and 152 hotel-condominiums. Now, after a $400 million renovation, just 12 of the luxury condos have yet to be purchased, the traditional hotel has been sold for $500 million, and a third of the hotel-condos are gone. With 475,000 square feet worth of luxury condos selling at a minimum of $5,000 a square foot, Elad is poised to rake in nearly $2.4 billion on residential sales.

"The conversion of the hotel to condominium residences has been a major success," a broker who sold two luxury condo units and has another in contract at the building, Richard Ferrari, said. Sales of the hotel-condos, where buyers live in the unit for 120 days a year and release it to the hotel for the remainder, have been "phenomenal," the head of sales for the Plaza at Stribling & Associates, Rosita Sarnoff, said.

Buyers of the luxury condos include the developer Harry Macklowe — who combined several for more than $60 million — the chief executive of Bear Stearns Cos., James Cayne, and race car driver Flavio Briatore. With views of Central Park, at the corner of Central Park South and Fifth Avenue, the condo prices start at $5,000 a square foot, far more than the neighborhood average of $1,672 a square foot, according to data from Streeteasy.com.

There is also 160,000 square feet of retail space spread over three floors, estimated to be worth as much as $500 million. The high-end gym Radu Physical Culture will move into the building next year when the retail space opens, and the London-based food gift shop Fortnum & Mason, famous for its afternoon tea, is close to signing a contract, according to the head of retail brokerage at Prudential Douglas Elliman, Faith Hope Consolo. Dylan's Candy Bar is another possible tenant.

It isn't just the condos and retail space that will likely attract big dollars for Elad. There are the celebrities and socialites willing to pay top dollar to rent out the 1929 ballroom for lavish events, and there is the ability to leverage the Plaza name for developments outside of New York City. In fact, Elad has spent more than $2 billion this year to acquire plots of land in Las Vegas and Singapore to develop into hotels, residences, and retail space bearing the vaunted double-P logo.

"It's the same as Starwood using St. Regis's name, or Hilton using the Waldorf-Astoria," the head of Cushman & Wakefield Sonnenblick Goldman's hospitality group, Mark Gordon, said.

While it will use the Plaza name for hotels outside the city, Elad does not actually own the 134-room hotel. One year after it acquired the Plaza from a partnership comprising a Saudi prince, Al-Waleed bin Talal, and Millennium & Copthorne Hotels, the Israel-based Elad sold the hotel portion of the building back to the prince for $500 million. The prince, who drew controversy after the September 11, 2001, terrorist attacks when he said America should "re-examine its policies in the Middle East," prompting Mayor Giuliani to refuse a $10 million donation for World Trade Center disaster relief, will run the hotel through his Fairmont Hotels chain. The nightly rates run between $775 and $1,275.

Called the "Arabian Warren Buffett" by Time magazine, the prince has donated $20 million to Islamic studies programs at Georgetown and Harvard universities, and last year established an institute for computational biomedicine at Weill Medical College of Cornell University with a $10 million donation. He is ranked by Forbes magazine as the 13th richest man in the world, with a personal fortune of $20.3 billion. His company, Kingdom Holdings, has large investments in Citigroup and News Corp. The company owns Fairmont Hotel & Resorts and Four Seasons Inc.

"Elad has done a terrific job," a former owner of the Plaza, Donald Trump, said in an interview with The New York Sun. "It will be a beautiful renovation when it's completed."

As with tonight's celebration, Mr. Tshuva has spared little expense in restoring the worn building.

"It's clear he's very proud to own this building," the designer who has overseen tonight's festivities, David Monn, said. "He views it as a landmark to the world."

It is also perhaps a symbol of Elad's growth into the global marketplace.

Mr. Tshuva was born in a poor neighborhood in Netanya, Israel, but rose over four decades to become a billionaire real estate mogul. In 2006, he was ranked 382nd out of the world's 793 billionaires, with a net worth $2 billion, according to Forbes magazine.

Mr. Tshuva's daughter, Gal Nauer, is leading the renovations to restore the Plaza to its former grandeur, including replacing the famous lay light — the glass-paned ceiling — in the Palm Court. The renovations include a 24-hour concierge service for the condo owners and 24-carat gold fixtures in the bathrooms of the hotel-condos.

Designed by Henry Hardenbergh, the architect of the Dakota apartments and the Art Students League in Manhattan, the Plaza is lauded as one of New York's most iconic buildings. Forty films have shot scenes in the hotel.

In the past 100 years, the Plaza has changed hands eight times, with such eclectic owners as Mr. Trump and the Saudi prince, as well as the Hiltons and a Japanese businessman. By the time Elad bought it, the roof leaked and some of the infrastructure hailed from the original construction. After three years, the building is nearly finished, and tonight the union leader that initially protested the construction, Peter Ward, will be giving a speech. The celebrities are back — Matthew Broderick will be among them tonight — and many of the new residents, including Mr. Tshuva, are already living in their apartments.

Historically speaking, the transformation of the hotel is not a radical departure from the original intent of the building. A former Plaza employee who wrote a book on the hotel, Curtis Gathje, said, "The condo hotel arrangement is actually closer to the original design. It was meant for people to live there a long time."

Elad has even hired the Plaza's longest running employee, Eddie Trinka, who was hired in 1963 and is now the doorman for the sales office. "I thought I was out of a job, but then they brought me back," he said.

Mr. Tshuva has invited more than 500 guests for tonight's birthday party, including the mayor and the "crème de la crème of New York," according to his daughter, Orly Daniell, who has organized the event. The building is rigged with the largest fireworks display ever built on a building in the city.

"This is a celebration of 100 years of glamour and elegance," the event's organizer, Ms. Daniell, said.

 

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