British firm Millennium & Copthorne sold its stake in New York's Plaza Hotel in a $675 million deal on Friday, bidding farewell to a fabled Fifth Avenue address that has been running up losses.
The 97-year-old hotel has hosted some of the world's biggest stars, including Hollywood celebrities Michael Douglas and Catherine Zeta-Jones, who held a wedding reception there.
However, the Plaza's returns were not good enough for Millennium & Copthorne (M&C), which has a policy of selling assets it considers non-core.
"The hotel needs renovation and I don't want to spend money anymore," Kwek Leng Beng, chairman of M&C and executive chairman of M&C parent City Developments Ltd, told a news conference in Singapore.
The Plaza ran up a pre-tax loss of some $900,000 for the year ended last December, hurt by its high cost base and a slowdown in business linked to the weakening of the US economy.
M&C held a 50 percent stake in Plaza Operating Partners, which is selling to stake on to US property firm El Ad Properties NY LLC. The other 50 percent of Plaza Operating Partners is owned by Saudi Prince Alwaleed bin Talal.
M&C, which is 52.6 percent-owned by Singapore-based City Developments Ltd, said it would use the proceeds to help cut debt.
Shares in M&C were up 3.5 percent at 313-1/4 pence by 1330 GMT and it was the second biggest gainer in the FTSE 250 mid-cap sector.
Seymour Pierce analyst Paul Leyland kept a "sell" rating on M&C, arguing that the company was currently overvalued, but added that the sale of the Plaza stake was a sensible move.
"They're redressing their balance sheet without giving away much cash flow," he said.
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