The Plaza Hotel stands in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

New York's Plaza Hotel Has Third Suitor Join Battle for Control

(Bloomberg) -- The storied New York Plaza hotel’s ownership drama has taken another turn. United Capital Real Estate Development Corp. has emerged as a third suitor for the property, according to court filings.

United Capital Real Estate is suing Subrata Roy, chairman of Sahara India Pariwar, as well as its U.S. entity, the property’s majority owner, alleging that they breached an agreement by seeking a separate deal, and fraudulently induced United to enter into contracts, show proof of funds and place money in escrow, according to a complaint filed in New York state court on June 22.

United Capital Real Estate is seeking damages of $1 billion plus interest and attorney costs. The complaint says it was also in contract to buy Sahara’s 85 percent stake in the Dream Downtown hotel, located between New York’s Meatpacking and Chelsea neighborhoods. It also says the sales included so-called "drag along" rights in which minority owners of the properties would have their rights extinguished, beyond receipt of proportionate net proceeds.

Roy himself signed two separate contracts on Feb. 19 and Feb. 27 on behalf of Sahara, the complaint says. Sahara has been attempting to sell its stake for years amid troubles for Roy, who served jail time and has been ordered by the Indian government to return billions of dollars to investors.

Second Complaint

It’s the second complaint filed against Sahara US Corp., which owns a 70 percent stake in the iconic hotel. Ashkenazy Acquisition Corp. and Saudi Prince Alwaleed bin Talal’s Kingdom Holding Co., sued the group in May for allegedly reneging on an agreement that gives them the right to match another offer. The offer they matched was from a group led by Shahal Khan, which agreed to pay $600 million in a deal that was set to be completed on June 25.

A person close to the Khan group, which is operating under a special-purpose vehicle known as Chimera Group, said it believes its membership interest purchase agreement is still valid and that it will reserve all its rights. Sandeep Wadhwa, president of Sahara US, didn’t respond to requests for comment. In May, he said he disagreed with the Ashkenazy and Kingdom allegations and would file a response in court, but is yet to do so.

The chateau-like Plaza is a New York landmark, situated across from the south-east corner of Central Park. It’s known as the home of the children’s book character Eloise and the site of famous events such as the signing of the 1985 Plaza Accord that devalued the U.S. dollar.

The hotel has a long string of prior owners including now-President Donald J. Trump, who married his second wife Marla Maples there, and who was also forced to sell it to a group including Alwaleed more than two decades ago as part of a bankruptcy proceeding. Much of the hotel portion of the building was later converted to condominiums by another owner, Israel’s Elad Group. The hotel is managed by Fairmont Hotels & Resorts, a unit of France’s Accor SA.

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