Plaza Hotel: Difference between revisions

The Plaza was sold to real estate developer [[Donald Trump]] in March 1988 following a [[handshake agreement]];<ref name="wsj19880318" /><ref>{{cite news|date=March 19, 1988|title=Trump May Buy Plaza Hotel; Sues to Block Resorts Bid|page=13|work=Newsday|id={{ProQuest|277985843}} }}</ref> the sale was valued at either $390 million<ref>{{Cite news|last=Cole|first=Robert J.|date=March 27, 1988|title=Plaza Hotel Is Sold To Donald Trump For $390 Million|language=en-US|work=The New York Times|url=https://www.nytimes.com/1988/03/27/nyregion/plaza-hotel-is-sold-to-donald-trump-for-390-million.html|access-date=July 9, 2020|issn=0362-4331}}</ref> or $410 million.<ref>{{cite news|date=March 28, 1988|title=Trump to Pay $410 Million for Plaza; Developer Vows to Restore Hotel's Luster|page=4|work=Wall Street Journal|id={{ProQuest|135376084}} |issn=0099-9660}}</ref> After gaining title into Julythe ofhotel that yearJuly, Trump appointed his wife [[Ivana Trump|Ivana]] as the hotel's president.<ref>{{cite news|title=Ivana Trump: Hard work, discipline and self-reliance|newspaper=Tampa Bay Times|first=Marion M.|last=White|date=September 26, 1988|url=http://infoweb.newsbank.com/resources/openurl?ctx_ver=z39.88-2004&rft_dat=document_id%3Anews%252F0EB528F413ED16AC&rft_id=info%3Asid%2Finfoweb.newsbank.com&rft_val_format=info%3Aofi%2Ffmt%3Akev%3Amtx%3Actx&svc_dat=AWNB&req_dat=1028A39C75C2B899|via=NewsBank}}</ref><ref name="newsday19880720">{{cite news|date=July 20, 1988|title=Playing The Palm Court As a Trump Card Says Ivana Trump, `We appreciate the old beauty|page=04|work=Newsday|id={{ProQuest|277975714}} }}</ref> The Trumps subsequently announced a major renovation program, which entailed restoring the lobby and some of the other interior elements.<ref name="newsday19880328" /><ref>{{Cite news|last=Dunlap|first=David W.|date=December 20, 1988|title=Trumps Plan to Revamp The Plaza in a Big Way|language=en-US|work=The New York Times|url=https://www.nytimes.com/1988/12/20/nyregion/trumps-plan-to-revamp-the-plaza-in-a-big-way.html|url-status=live|access-date=December 1, 2020|issn=0362-4331}}</ref> The work also involved gilding many surfaces, replacing carpets, and reupholstering furniture.<ref>{{cite news|last=Revson|first=James A.|date=September 21, 1989|title=Donald and Ivana Glitz the Plaza|page=04|work=Newsday|id={{ProQuest|1943384125}} }}</ref> The hotel made a modest profit for about two years after Trump's purchase, largely from increased occupancy, suite rates, and banquet bookings.<ref>{{Cite journal|last=Agovino|first=Theresa|date=January 29, 1990|title=Profit in Sight for a Rejuvenated Plaza|id={{ProQuest|219134786}}|journal=Crain's New York Business|volume=6|issue=5|pages=1}}</ref>

Trump had borrowed extensively to purchase the Plaza Hotel, but its [[operating income]] was several million dollars below the [[Break-even (economics)|breakeven]] point.<ref name="Mashayekhi 2018" /><ref>{{Cite news|last=Norris|first=Floyd|date=June 5, 1990|title=A Haze of Debt Clouds The Plaza Hotel's Gleam|language=en-US|work=The New York Times|url=https://www.nytimes.com/1990/06/05/business/a-haze-of-debt-clouds-the-plaza-hotel-s-gleam.html|access-date=July 9, 2020|issn=0362-4331}}</ref> As a result, the Plaza Hotel's debt ultimately grew to $600 million.<ref name="Sun Sentinel 1992">{{Cite news|last=Reuters|first=|date=March 19, 1992|title=Trump Relinquishing Half of Plaza Hotel Sale of Suites as Condos Fails to Raise Cash|page=2D|work=Sun Sentinel|id={{ProQuest|388941901}} }}</ref> By 1991, Trump was making plans to pay off the hotel's debt by selling off the vast majority of its units as [[condominium]]s. Trump estimated that the conversion would net $750 million, almost twice the purchase price.<ref>{{cite news|date=April 10, 1991|title=Trump planning to convert posh Plaza Hotel into condos|page=16|work=Star-Gazette|location=Elmira, NY|url=https://www.newspapers.com/clip/64215188/|access-date=November 29, 2020|via=newspapers.com {{open access}}}}</ref><ref>{{Cite news|last=Hylton|first=Richard D.|date=April 9, 1991|title=Trump Aims to Turn Most of Plaza Hotel Into Condominiums|language=en-US|work=The New York Times|url=https://www.nytimes.com/1991/04/09/business/trump-aims-to-turn-most-of-plaza-hotel-into-condominiums.html|url-status=live|access-date=November 29, 2020|issn=0362-4331}}</ref><ref>{{cite news|title=Trump expected to sell rooms in Plaza Hotel|newspaper=Los Angeles Daily News|first=Richard D.|last=Hylton|date=April 9, 1991|url=http://infoweb.newsbank.com/resources/openurl?ctx_ver=z39.88-2004&rft_dat=document_id%3Anews%252F0EF612924BA52D15&rft_id=info%3Asid%2Finfoweb.newsbank.com&rft_val_format=info%3Aofi%2Ffmt%3Akev%3Amtx%3Actx&svc_dat=AWNB&req_dat=1028A39C75C2B899|via=NewsBank}}</ref> Trump also considered converting the offices within the mansard roof to penthouse condos.<ref name="Satow ch. 11" /><ref>{{Cite news|last=Lueck|first=Thomas J.|date=June 3, 1990|title=Reaching for the Sky to Add a Room|language=en-US|work=The New York Times|url=https://www.nytimes.com/1990/06/03/realestate/reaching-for-the-sky-to-add-a-room.html|url-status=live|access-date=November 30, 2020|issn=0362-4331}}</ref> The conversion plan failed because ofit would have been unprofitable, due to a then-recent drop-off in prices in the city's real estate market.<ref name="Satow ch. 11" /><ref name="Sun Sentinel 1992" /> As a last resort, in March 1992, Trump approached the Plaza's creditors, a group of seventy banks led by [[Citibank]], who agreed to take a 49% stake in the hotel in exchange for forgiveness of $250&nbsp;million in debt and an interest rate reduction.<ref name="Sun Sentinel 1992" /><ref>{{cite news|title=Trump yields 49% of Plaza Hotel in N.Y.|newspaper=The Star-Ledger|location=Newark, NJ|date=March 19, 1992|url=http://infoweb.newsbank.com/resources/openurl?ctx_ver=z39.88-2004&rft_dat=document_id%3Anews%252F12246C4B02ABA3B8&rft_id=info%3Asid%2Finfoweb.newsbank.com&rft_val_format=info%3Aofi%2Ffmt%3Akev%3Amtx%3Actx&svc_dat=AWNB&req_dat=1028A39C75C2B899|via=NewsBank}}</ref><ref>{{cite news|last=Lowenstein|first=Roger|date=March 19, 1992|title=Trump Agrees to Give Lenders 49% of Plaza Hotel|page=A5|work=Wall Street Journal|id={{ProQuest|135320103}}| issn=0099-9660}}</ref> The agreement was submitted as a [[prepackaged bankruptcy]] in November 1992<ref>{{cite news|date=November 4, 1992|title=Prepackaged Bankruptcy Is Filed for Plaza Hotel|page=A6|work=Wall Street Journal|id={{ProQuest|398326488}}|issn=0099-9660}}</ref><ref>{{Cite news|date=November 4, 1992|title=Company News; Trump Revises Plaza Loan|language=en-US|work=The New York Times|url=https://www.nytimes.com/1992/11/04/business/company-news-trump-revises-plaza-loan.html|url-status=live|access-date=November 30, 2020|issn=0362-4331}}</ref> and approved the next month.<ref>{{Cite news|last=Reuters|date=December 12, 1992|title=Company News; Trump's Plaza Hotel Bankruptcy Plan Approved|language=en-US|work=The New York Times|url=https://www.nytimes.com/1992/12/12/business/company-news-trump-s-plaza-hotel-bankruptcy-plan-approved.html|access-date=July 9, 2020|issn=0362-4331}}</ref>