The future of the Park Lane Hotel has been up in the air for more than a year now, but the Wall Street Journal reports that the property’s fate is finally sealed: after a roller coaster of a year, the hotel is … going back on the market.
To recap: Back in 2013, the Witkoff Group, led by developer Steven Witkoff, picked up the hotel for more than $650 million. The plan, back then, was to turn “the bulk of the property” into high-end condos. But in early 2016, Bloomberg reported that Witkoff (along with co-developer Harry Macklowe) had decided to delay the condo conversion, given that the market was, by then, already flush with luxury condos. “The fact of the matter is, the velocity is not what it was,” Witkoff told Bloomberg at the time. “Because we have a cash flow, we have the flexibility to wait.”
But a few months later, the conversion was back on, thanks to an influx of foreign cash: Chinese developer Greenland Hong Kong acquired a 41-percent stake in the project from Kuwait Strategic Investors. And the project might have proceeded as-is, if the Justice Department hadn’t connected some of the hotel’s investors to an international money laundering scheme of blockbuster proportions.
In July, the Justice Department issued a 136-page lawsuit outlining the details of the scheme. And it was quite a scheme, involving an international cast, multiple New York properties, a private jet, and a Van Gogh. (You can read a more thorough rundown of the whole episode here.) Among other things, the lawsuit sought to seize a substantial stake in the Park Lane Hotel purchased by high-rolling Malaysian businessman Jho Low through a limited liability partnership with Witkoff.
According to the suit, Low—who provided Witkoff with most of the equity to buy the place—used “hundreds of millions of dollars allegedly siphoned from state investment fund 1Malaysian Development Bhd, or 1MDB,” the WSJ explains. In other words: Low and his conspirators allegedly redirected money from a fund meant to benefit the Malaysian people to themselves and their buddies. And according to the Justice Department, Low used “some of the proceeds from this fraud to pay for his stake in the Park Lane,” the WSJ reports.
Which brings us to today: A federal judge has approved a plan to put all of Park Lane up for sale, rather than just the stake owned by Low. That’s a change from the initial agreement. At first, the Justice Department and Witkoff—who, the WSJ notes, hasn’t been accused of any wrongdoing—asked the court to “approve just the sale of Mr. Low’s majority stake in the hotel.” Now, though, court papers show the plan is to sell the whole property.
Low, who has denied any wrongdoing, objects to the proposed plan, in part because of what the judge called “unsubstantiated fears” that Witkoff would “enrich himself at the expense of the Low claimants.” According to the ruling, though, Witkoff will be “sufficiently checked” to ensure that won’t happen.
A spokesman for Low did not respond to the WSJ for comment. Meanwhile, if you are in the market for a hotel, we’ve got a lead for you.
- Judge Clears Plan by U.S. and Steven Witkoff to Sell Park Lane Hotel [WSJ]
- Helmsley Hotel To Sell For $650 Million, Condos Come Next [Curbed NY]
- Central Park South Hotel Won't Give Way to Condos After All [Curbed NY]
- Stalled Central Park South Supertall May Move Forward With New Backer [Curbed NY]
- Pricey NYC Condos Seized In Connection With Money Laundering Investigation [Curbed NY]