Questions Persist About Financing of Pierre Hotel Sale
The contentious sale process of the Pierre Hotel appeared to take another twist this month when a $100 million deposit was promised by the chair of the co-op board, yet never materialized.
“A wire transfer instruction has been issued to transmit the $100,000,000,” the chair wrote to shareholders on Sept. 4, Vanity Fair reported, after the voting window for the property’s $2 billion sale opened. The Brunei-owned Dorchester Collection and Saudi businessperson Motasem Khashoggi are trying to buy the historic property, which is partially operated by Taj Hotels.
It’s not clear if a deposit is needed at this point, since shareholders are still deliberating on whether they’ll sell to the Khashoggi family. But false promises won’t do much to sway concerned residents in favor of the sale.
When shareholders questioned the ability of the Khashoggis to finance the deal during a meeting in July, one of their representatives described the funds as “currently available.” A Fried Frank lawyer involved in the deal said the cash would be moved to a Citibank and “fully verified” before shareholders had to vote.
Khashoggi’s company has never done a deal this large, according to a corporate intelligence report.
A spokesperson for a Khashoggi affiliate said it “remains fully committed to completing the transaction and has the money required to close. We have been in direct contact with the Board and have reaffirmed that commitment.”
Fashion designer Tory Burch and fellow irked residents filed suit to halt what they claimed was a secretive and coercive $2 billion sale of the Fifth Avenue property that could result in their eviction. The complaint accused the co-op board of striking an agreement with an unidentified LLC allegedly tied to the Khashoggi family, which would fold the building into the Brunei-owned Dorchester Collection.
The New York Supreme Court judge dismissed the case and ruled that the lawsuit was no longer relevant because one of the biggest claims — a lack of transparency from the building’s board — had been alleviated.
But the sale process and its connection to penthouse owner and U.S. Commerce Secretary Howard Lutnick continue to confound.
The Pierre has been struggling to adapt to modern times, making an infusion of capital intriguing. Maintenance and service are deteriorating, resulting in fraying carpets and spotty staffing.
The catch: all of the residents would be forced to leave under the $2 billion deal and the staff who tend to the property would be let go.
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