Israeli Billionaire Yitzhak Tshuva Sells Shares in New York's Plaza Hotel

He bought the iconic Manhattan hotel in 2004 for $675 million, profoundly renovated it and is now exiting at a $920 million profit.

Yitzhak Tshuva sold off his holdings in New York's Plaza Hotel - and made a $920 million profit on his investment over eight years of rebuilding the landmark building.

The Elad Group, Tshuva's private real estate arm in North America, signed the deal on Monday to sell its share in the hotel and commercial center to the Sahara Group, one of India's largest companies, for $575 million.

In 2004 Tshuva bought the Plaza, a 105-year-old hotel with a view of Central Park, from a group of investors headed by Saudi prince Alwaleed bin Talal for $675 million. After the acquisition, Tshuva ruffled not a few feathers among Manhattan's glitterati by radically renovating the building. Local sentiment was outraged less by his turning much of the hotel into condos than by his closing down the hotel's Palm Court restaurant. Tshuva also clashed with local unions over job losses at the hotel.

Including the renovations, Tshuva invested a total of $1 billion in the Plaza, which was divided into four parts: 182 luxury apartments, a hotel, condominiums and commercial space.

Tshuva took advantage of the good times in the New York real estate market and sold all the apartments for a total of $1.5 billion. Another $200 million came from the sale of the hotel part back to bin Talal, who owns 40% of the Plaza. Bin Talal is not part of the present deal.

Elad will see a free cash flow of $220 million from the deal, which will make it easier for Elad to pay off the more than $500 million it owes to bondholders in Israel, as well as allowing it to make new investments.

News of the deal broke almost two months ago when the Indian newspaper Economic Times reported that Sahara was carrying out due diligence on the deal via subsidiary Aamby Valley and had deposited a 10% advance into a trustee account.

Bloomberg