Elad Properties Plans Plaza Expansion

Despite credit crunch, CEO says equity exists for global development.

-- Hotels, 5/1/2008

NEW YORK CITY—Despite the reported lack of available credit for hotel development and rumors swirling about the massive US$5 billion Las Vegas development being put on hold, Elad Properties President and CEO Miki Naftali is steadfast in his resolve to grow the company's Plaza brand around the world.

About a month after re-opening the famed Plaza in New York (a US$400 million-plus refurbishment), Naftali says Elad has the money, the partners and desire to build The Plaza into a global powerhouse brand.

“The financial crisis today creates opportunities for strong players,” Naftali says. “Weak players that could bring equity to table due to the easy financial market have disappeared. On the development side there are only a few real estate players and developers who can bring enough equity and have the track record to finance deals. We have a lot of experience and equity to invest, and [we] own a fabulous brand. So for commercial banks we are a perfect player, and this is how we plan to get the opportunities in the market.”

Naftali says mega-projects in Las Vegas and Singapore should be open by 2011, and another site or two should be secured by then. Elad is in negotiations around the world, and Naftali points to London, Paris, Shanghai, Tokyo and Hong Kong as targeted locations. In the United States, he is bullish on Beverly Hills, San Francisco, Boston and Washington, D.C.

In Las Vegas, Naftali says Elad is building 4,000 keys to go with retail, gaming, residential, convention space and more in phases at its Strip site across from Steve Wynn's Encore project. By 2011, he says, 2,700 keys should be open. And in Singapore, Elad is in a joint venture with Dubai World, among others, to create an ultra-luxury mixed-use concept—again with a Plaza hotel anchoring the site.

Macau and Dubai also are on Elad's radar. The Plaza in Las Vegas is not only an extension of Elad's hospitality business but its first step into gaming, which it plans to expand to Macau with a mega-resort and casino. “In Dubai, we are looking at opportunities, but we have to make sure it fits The Plaza brand,” Naftali says.

Naftali admits that growing The Plaza brand is going to be a difficult task, “but if you don't have a plan and a vision, you can't start,” he says. “We are extensively looking and negotiating specific locations. If the right opportunity presents itself, we can move fast and close the deal.”

Naftali believes that for investors, The Plaza brand is best in private ownership available in market. “We are not interested in letting just anyone use the brand, but we are interested in joint ventures to extend the brand in a relatively short time. For example, in Moscow, we are happy to co-invest and co-develop on a great site with someone who knows the market.”

Back in New York City, after an exhaustive three-year renovation program, The Plaza is back in business and Naftali is shooting for a US$1,000 a night room rate. And thanks to the sold out ultra-luxury mixed-use portion of the project, Naftali says it is already profitable. “It is so great to see people coming into The Plaza curious to see what has been done, and I am very happy with the reaction,” he says.

Based on the initial feedback and results, Naftali says a US$1,000 a night rate is more than achievable. “I can't predict the market, but we are already close to it in the first month,” he says.

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