The Plaza Hotel, long a symbol of luxury and grandeur in New York and more recently the crown jewel in Donald J. Trump's shaky business empire, is being sold to two of the world's richest men: a Saudi Arabian Prince and one of Singapore's leading entrepreneurs.
The buyers said yesterday that the deal put a total value of $325 million on the landmark hotel at 59th Street and Fifth Avenue near Central Park.
In essence, the buyers are taking over the Plaza by assuming most of its debts. None of the money from the deal will go to Mr. Trump, who acquired the hotel for about $400 million in 1988. Rather, it will go to banks in the United States that had lent money to Mr. Trump and to banks in Japan that hold a mortgage on the hotel property.
While Mr. Trump will retain a say in the hotel's operations as a minority partner, his surrender of control is a defeat for the real estate developer, who in the heady days of the late 1980's proclaimed the Plaza "the ultimate trophy in the world." But the world has drastically changed for Mr. Trump since then, as real estate prices collapsed.
The complexity of the sale announced yesterday, and the international scope of the transaction, illustrated how the arenas of real estate and finance have grown beyond national boundaries, and how the business world has shrunk, in ways even the most visionary people could have hardly imagined when the Plaza opened in 1907.
The sale, rumored for weeks, was announced in Singapore by CDL Hotels International Ltd. The company, which owns 35 hotels around the world including the Hotel Macklowe the Millenium in Manhattan, said it had formed a venture with an entity controlled by Prince Walid bin Talal, a 40-year-old nephew of King Fahd of Saudi Arabia who has been buying into the luxury hotel business.
The prince first came to prominence several years ago when he invested heavily in Citicorp as that banking company was struggling with big losses. He has since invested in the Four Seasons Hotels chain, Saks Fifth Avenue and Euro Disney.
CDL is part of the Singapore Hong Leong Group, a corporate empire controlled by the developer Kewk Hong Png, which also has interests in real estate, machine tools and energy. His son, Kwek Leng Beng, runs CDL.
The purchase of the hotel is a complex deal but in its simplest terms the new investors will take control of the property and manage the hotel, and Mr. Trump, who once had near total control of it, will have a substantially reduced role.
He will, however, develop plans with the new owners to build luxury condominiums on the Plaza's top floors and additional retail space. The new owners also plan to spend $28 million for renovations.
As part of the deal, CDL and the Prince will pay down the outstanding debt on the hotel owed to the banks, reducing it to about $25 million from more than $300 million. According to people familiar with the transaction, that remaining $25 million will be converted into equity held by a bank consortium led by Citibank.
Under terms of an agreement reached late in 1992, that consortium agreed to forgive overdue interest payments on some $300 million in loans in return for a 49 percent stake in the Plaza.
"There will be four partners," said Abraham Wallach, a spokesman for Mr. Trump. "The banks, primarily Citibank, who will get a preferred return on their equity; Prince Walid; CDL Hotels and Mr. Trump."
Mr. Wallach declined to specify what percentage of the Plaza each partner would own. But at a news conference in Singapore yesterday, a CDL spokesman told The Associated Press that the Prince and CDL "eventually" would hold up to 80 percent of the hotel.
In addition to paying down the debt, the new partners have agreed to pay $25 million in each of the next three years to reduce a $300 million first mortgage on the property held by a consortium of Japanese banks.
The mortgage, which is held by the Industrial Bank of Japan, comes due in December. If the Japanese group does not want to refinance the loan, CDL and the Prince have agreed to pay off the mortgage in its entirety.
Mr. Trump currently owns 51 percent of the Plaza. The rest is owned by the banks, which obtained their interest from Mr. Trump three years ago in exchange for a substantial reduction in his bank debt. Mr. Wallach said those involved hoped to complete the deal by summer.
Mr. Trump bought the Plaza during the real estate boom of the 1980's, using borrowed money. Additional debt was piled on the property over the next couple of years as he leveraged the landmark to buy the Eastern Airlines shuttle and to help pay the construction cost of his Taj Mahal casino in Atlantic City.
By 1992, the weight of the recession that hit New York City after the stock market crash in 1987 and the collapse in real estate prices had taken a heavy toll on Mr. Trump's finances. Negotiations began to rework some $560 million in debt.
After the Citibank consortium agreed to forgive the past interest payments on debt, Mr. Trump still retained the 51 percent interest on paper, but since he had no equity in the hotel -- having put up no cash when he bought it -- the banks effectively owned the property. The banks have been trying to find a buyer for the last three years.
Negotiations between CDL and Mr. Trump began last fall. In February, the Prince visited the hotel and expressed an interest.
Along with Mr. Kwek and the Prince, Mr. Trump will be a member of a management committee and "will have responsibility for setting policy at the hotel," the announcement in Singapore said. But day-to-day operations will be handled by Fairmont Hotel Management, the San Francisco-based concern in which the Prince is half-owner.
Designed by Henry Janeway Hardenbergh, the architect whose works include the Dakota apartment building on the Upper West Side of Manhattan, the Plaza has long been as much institution as hotel. Overlooking Grand Army Plaza and Central Park South, the 19-story French Renaissance structure has played host to billionaires, heads of state, artists and dreams.
When it opened for business on Oct. 1, 1907, Alfred Gwynne Vanderbilt was the first to sign the guest register. Jay Gould and other turn-of-the-century high-rollers kept suites there. So did Frank Lloyd Wright, who according to legend grudgingly conceded that the Plaza was one of the few buildings he liked that he had not designed himself.
Films celebrating the Plaza include "Plaza Suite," "North by Northwest," "Network," "The Way We Were," and "Home Alone 2."
Mr. Trump may not have known every chapter in the hotel's history, but he no doubt knew some of it when he said, after he bought it: "This isn't just a building, it's the ultimate work of art. I was in love with it. I tore myself up to get the Plaza."
Rates at the Plaza vary by season and availability. A reservations assistant said yesterday that typical rates range from $225 to $495 for a room and $650 to $12,000 for a suite.
Ivana Trump, Mr. Trump's wife at the time he bought the hotel, managed the Plaza for a while but no longer has a role there.
Regardless of his financial troubles, Mr. Trump and his organization have run the Plaza quite well, said Thomas McConnell, a hotel expert with the accounting firm of Arthur Andersen & Company.
Before Mr. Trump acquired the Plaza, "it was more a three-star," Mr. McConnell said, "and he kicked it up to a four-star."
The Plaza has had a consistent occupancy percentage in the high 70's or low 80's, which exceeds the city average, Mr. McConnell said.
Photo: Donald J. Trump is selling the Plaza Hotel, on 59th Street and Fifth Avenue in Manhattan, to two of the world's richest men: a Saudi prince and a Singapore developer who owns a worldwide hotel chain. (Jose R. Lopez/The New York Times) (pg. D6)