Pakistan set to conclude privatization of Roosevelt Hotel this year, aiming to secure services of a financial advisor
The Pakistani government is pushing ahead with the partial sale of the Roosevelt Hotel in New York, aiming to finalize the transaction within 2025 through a joint venture model. This decision was made to maximize long-term value and avoid an outright sale.
However, a recent development saw global real estate firm Jones Lang LaSalle (JLL) withdraw from its role as financial adviser due to a conflict of interest. Many of JLL's clients have shown interest in the hotel, potentially creating a bias. The government has already published an advertisement to hire a new financial adviser, with the selection process ongoing and plans to appoint the new adviser on a fast-track basis.
The delay in hiring this adviser and completing due diligence could potentially cost Pakistan around $50 million yearly in debt servicing and maintenance. However, officials are optimistic that a professionally managed joint venture transaction will recover these costs. There is also an emphasis on increasing the Privatization Commission’s capacity to ensure timely and informed decisions during this process.
The Roosevelt Hotel, one of Pakistan's most valuable foreign assets, has been closed since 2020 and is currently unoccupied following the end of a migrant shelter lease. The sale of the hotel is part of a broader effort by Pakistan to offload loss-making state-owned assets under a $7 billion agreement with the International Monetary Fund (IMF).
Adviser to the Finance Minister Khurram Schehzad confirmed that the advertisement for the new financial adviser has already been published and the selection process is underway. He also clarified that there is no delay of one-and-a-half years in the transaction as reported, and it will be completed within this year as planned.
Dr. Ali Salman, executive director of PRIME, believes that the cost of the delay could be recovered through a joint venture deal if it is carried out professionally and transparently. Dr. Sajid Amin, deputy executive director at SDPI, expressed disappointment that authorities were unable to privatize the Roosevelt Hotel despite its prime location. He believes that increasing the capacity of the Privatization Commission could ensure timely and well-informed decisions.
It's worth noting that the loan for the Roosevelt Hotel was issued by the National Bank of Pakistan, according to Adviser to the Finance Minister Khurram Schehzad. Amin suggests that the withdrawal of the advisory firm will not have a significant impact on Pakistan's IMF reforms agenda.
In conclusion, the sale of the Roosevelt Hotel is progressing, despite the change in financial advisers. The government remains committed to maximizing long-term value and ensuring a professionally managed transaction to recover any potential costs associated with delays. The selection of a new financial adviser is ongoing, with plans to appoint them quickly to avoid further delays.
- The Pakistani government is selling the Roosevelt Hotel, aiming to finalize the transaction through a joint venture model by 2025, as part of a broader effort to offload loss-making state-owned assets under a $7 billion agreement with the International Monetary Fund (IMF).
- The sale of the Roosevelt Hotel, one of Pakistan's most valuable foreign assets, has been delayed due to the withdrawal of global real estate firm Jones Lang LaSalle (JLL) as financial adviser due to a conflict of interest.
- Officials are optimistic that a professionally managed joint venture transaction will recover the potential costs associated with delays, which could be as high as $50 million yearly in debt servicing and maintenance.
- The East-west dynamics of investing in the Roosevelt Hotel are complex, with the news of its sale creating interest from various stakeholders, including financiers and art investors, in the real-estate and business sectors.
