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Citicorp selling stake in Plaza?

Sources report Citicorp's nearly half share of the Plaza Hotel may be for sale in the near future.

Any sale would not affect Donald J. Trump's majority ownership but would merely change who he makes his checks out to.

Trump came to a "very friendly" agreement with Citicorp last spring. It gave him a 51 percent controlling interest in the tony Plaza for a washout of $125 million in personal guarantees. While the $300 million floating-rate mortgages remains, Trump is able to pay as little as 5 percent interest while allowing the balance to accrue.

The pre-packaged bankruptcy, sources said, was confirmed by the court last week, giving Citicorp its first legal right to a sale. There is also a "strike' number that declines with each passing year.

Richard Wilhelm, president of the Plaza Hotel, said: 'I have absolutely no involvement with that.'

It was the first he had heard of the reports and declined comment. Trump was out of town and Citicorp also declined comment.

Trump purchased the worldrenowned hotel for about $408 million in 1988 and totally refurbished the interior using abundant amounts of gold leaf.

Hotel analyst, John A. Fox, a principal of Pannel Kerr Foster CPAs, said, "While the hotel has in the past performed pretty poorly, it has the potential to perform better."

The most recent hotel transactions in the city were made in the $225,000 per room category. The New York Palace is also for sale for $250,000 per room.

From a value viewpoint, The Plaza's $300 million mortgage is high, agreed hotel analyst Stephen W. Brener.

Mark S. Edelstein, a partner in the real estate workout and bankruptcy group at Milbank Tweed Hadley & McCloy, said, "To the extent that Citibank is entitled under its documents to sell its share, it wouldn't surprise me that they are doing it."

At one time Trump was going to convert the hotel to condominium with an expected offering price of $800 million. This deal was put on the back burner because occupancy and other receipts improved.
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Title Annotation:Plaza Hotel in New York, New York may be for sale
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jan 27, 1993
Previous Article:GW Michaels merges with Newmark RE.
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