Now, Madison Capital wants to lap up Sahara's New York properties for $800 mn

While Pune-based cash-rich pharma billionaire Cyrus Poonawalla has upped the ante on his offer to buy out beleaguered Sahara Group’s coveted overseas asset, the Grosvenor House Hotel in London, New York-headquartered Madison Capital is looking to snap up Sahara’s New York properties - The Plaza and Dream Downtown - for $800 million.

The Economic Times today reported that Madison Capital, which is a real estate investment and operating company based in New York City that specializes in acquiring prime urban retail and commercial assets, is willing to offer a 21 percent premium for the two hotels.

Sahara owns 70 percent stake in the Plaza and 85 percent in Dream Downtown. According to real estate consultants CB Richard Eliis and Jones Lang Laselle, Sahara’s stake implies a $628.6 million valuation, while the total market valuation of two New York Hotels is $844 million.

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The Sahara Group is looking to sell three of its overseas assets - Grosvenor House, The Plaza and Dream Downtown hotels in New York - to raise money to bail out Sahara chief Subrata Roy who is languishing in jail for the last four months in a contempt of court case. As per a August 2012 Supreme Court order, the group has to pay back about Rs 24,000 crore to investors in optionally fully convertible debenture illegally issued by two companies under its fold. The court is not buying Sahara’s claim that it has returned the money to the investors.

The other contenders in the race are the royal family of Qatar and Sultan of Brunei. While Sahara is believed to be looking for a buyer who will cough up close to $1.2 billion for the all three hotels, the Pune-based Poonwalas are clearly interested in only the London property, while Madison is only keen on the New York properties.

The valuation report by JLL dated 26 February 2014 values Grosvenor House at 516 million or $879 million. The Poonawalas are willing to pay550 million for this marque property .

Sahara expects the sale value of these properties to be 30.5% higher than their purchase cost.The company has submitted in court that it expects the final sales value to be higher than the valuation figures-645 million or for Grosvenor House, $635 million for The Plaza and $252 million for Dream Downtown. So far, none of the bids have matched up to Roy’s expectations.

Sahara had bought the five-star Grosvenor House Hotel from Royal Bank of Scotland for 470m in 2010, while it lapped up The Plaza for $570 million and theDream Downtown, owned by celebrated New York hotelier Vikram Chatwal for $220 million in 2012.