Bloomberg Businessweek - USA (2019-05-27)

buy.canshe dressestheall and$1 herpayto promisingpresident,as Ivana,wife,his installsand funds

intheopulentlivingroomonornatesofas,discussingspecific

termsoftheproposal.Butlittledidthemenknow,Wallach

wasthere,too,eavesdroppingontheinterlopersandscrib-

blingeverythingtheysaidona notepad.A longtimedoorman

hadtoldWallachthatthesuitehada secretroom,accessedby

a backstairwayandhiddenbehinda fakewall.For 10 days,

Wallachconcealedhimselfinthecrampedspaceandcaused

mischief.When,forexample,theexecutivesdiscusseda

$100millionloantheyplannedtotakeouttobuythehotel,

Wallachcalledthesamebankandrequesteda second$100 mil-

lionPlazaloanonbehalfofTrump,confusingthebankers.

Inanotherinstance,whichWallachclaimswasTrump’s

brainchild,thefiredepartmentwascalled.“Youhear‘FIRE!’

Andthensuddenly,allover59thStreetandFifthAvenue,fire-

mencomerunningintothebuildingwithhatchetsandhoses,

andeverybody’srequiredtovacatethebuildingbecause[it]

is deemedstructurallyunstable,”Wallachtoldme.A fewdays

ofchaosensued,wherethehotelexecutiveswereforcedto

takerefugeatanotherhotel,buteventuallythemenreturned,

determinedtoforgeahead.

Citibankandtheothercreditorsapparentlycaughtwind

ofthechicanery.“Idrove[Citibank]nuts,”Trumplatertold

theJournal. “Idida numberonthemthatyouwouldn’t

believe.”ThebankthreatenedtoholdTrump’sotherdeals

hostageunlessWallachhaltedhisanticsandallowedthesale

tomoveforward.Sointheend,Trumpwasforcedtocall

Wallachoff.“Donaldshowsupinmyofficeandsays,‘Abe,

wehavetostopallofthis,wehavetostop.’I said,‘Why,

Donald?We’rereallygoingtobeabletocreatea positionfor

ourselves.’” It wasthenthatWallachbecameemotional,and

Trump,seeinghisfaithfullieutenantcry,

didhisbesttoofferreassurances.

Trumphadnochoicebuttogiveup

thePlaza.Hewasinthemidstofnegotiat-

ingwithCitibankandhisothercreditorsto

savewhathecouldofhisempire,andhe

couldn’triskit allfallingapartonthebasis

ofonehotel.SoinApril1995,thedealwith

KwekandAlwaleedfinallyclosed.It val-

uedthehotelat$325 million,or$83 mil-

lionlessthanwhatTrumphadpaidseven

yearsearlier.Thetransactionwascomplex,

withKwekandAlwaleedagreeingtoreduce

theoutstandingdebtonthehoteltoabout

$25 millionfrommorethan$300 million,

inexchangeforeachreceivinga stakein

thehotelofjustunder42 percent.Citibank

wasalsotostayinthedeal,witha 16 per-

centequitystake.

KwektoldtheJournalthathewanted

Citibanktoremainanequitypartnerin

thedealtoensurethatTrumpwouldn’t

causehimany furthertrouble.Trump

hada so-calledrightoffirstrefusal,which

allowedhimtomatchanyofferforthe

Plaza—animprobablescenarioconsideringthestateofhis
finances.WhileTrumpwasunlikelytoexecutethatright,
Citibank,asTrump’sleadlender,hadleverageoverhim.
KeepingCitibankinvolvedprovidedadditionalinsurancethat
Trumpwouldn’ttrytointerruptthesale.Severalyearslater,
KwekandAlwaleedwouldpurchasetheremainderofthe
equityfromCitibanktobecome50-50owners.
KwekandAlwaleedalsoagreedtothrowTrumpa few
scraps:If,undertheirownership,thetopfloorsofthePlaza
wereeverconvertedintopenthouses,Trumpwouldgeta cut
oftheprofits.Hewouldalsoseea smallfeeif thehotelwas
soldwithinsevenyears.“Iwasa goodlistenerwhennegoti-
atingwithTrump,”Kwektoldme.“Hewantedtocontinue
managingthehotelandbepartoftheventure.Weeventually
narroweddownhisrole.”
Trump’spenthouseswouldn’tbebuiltduringKwekand
Alwaleed’stenureasPlazaowners,andthehoteldidn’tsell
withintheallottedtimeframe,soTrumpneversawanyprofit
fromthedeal.Despitecomingouta loser,Trumpinsistedthat
hewasa partofthenewownership.“We’llberunningthe
hotel.Thisis a jointventure.Asa jointventure,everybody
hasinput,”TrumptoldtheNewYorkTimes. “Therewillbe
fourpartnersinthedeal,”insistedWallach,namingKwek,
Alwaleed,Citibank,and“Mr.Trump.”
WithKwekandAlwaleedat thehelm,thehotelwas
underforeignownershipforthefirsttime.“Thecomplex-
ityofthesaleannouncedyesterday,andtheinternational
scopeofthe transaction,”theTimeswrotein1995,“illus-
tratedhowthearenasofrealestateandfinancehavegrown
beyondnationalboundaries,andhowthebusinessworld
hasshrunk,inwayseventhemostvision-
arypeoplecouldhavehardlyimagined
when the Plaza openedin 1907.” Of
course,thePlazahadlongwelcomedfor-
eignguestsandwasa favoriteofvisit-
ingdignitaries.Buttheacquisitionofthe
hotelbytheSingaporeanbillionaireand
theSaudiprinceindicatedanincreasing
globalizationoftherealestatemarket.It
wasa trendthatwouldonlyacceleratein
futureyearsacrossManhattanandatthe
Plazaitself.
A fewyearsafterKwekandAlwaleed
boughtthehotel,theysoldit toanIsraeli
condominium developer who carved
muchofthebuildingintoapartments.He
thensoldtheremainingboutiquehotel
toanIndiantycoon.Lastyear,thehotel
changedhandsoncemorewhenthegov-
ernmentofQatarboughtit.
AdaptedfromThePlaza:TheSecretLife
ofAmerica’sMostFamousHotelbyJulie
Satow,tobepublishedonJune 4byTwelve,
animprint of Hachette Book Group.
FROM Copyright© 2019 byJulieSatow

TOP:

MIKE

PONT/WIREIMAGE/GETTY

IMAGES;

MUSTAFA

YALCIN/ANADOLU

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IMAGES

Kwek

Alwaleed

owner Harry Black kills himself. 1943: Conrad Hilton buys the hotel amid wartime rationing. 1955: Mischievous 6-year-old Eloise becomes the Plaza’s most famous resident. 1966: Truman Capote hosts the Black and White Ball, with Gloria Vanderbilt and Frank Sinatra in attendance. 1975: Western Inter

national Hotels acquires the property as the city faces fiscal ruin. 1988: Trump buys it with borrowed

Bloomberg Businessweek

WHERE THE MONEY IS

May 27, 2019