India’s largest private company indulged itself in some not-so-little retail therapy over the weekend.
On Jan. 8, Reliance Industries (RIL) announced that it is buying a 73.37% share in New York City’s Mandarin Oriental luxury hotel for $98.15 million from Columbus Centre Corp, a subsidiary of the Investment Corporation of Dubai (pdf). The transaction is expected to conclude by the end of March, pending regulatory approval, the Indian firm said in a filing to the BSE (pdf).
In the event the remaining owners of Mandarian Oriental decide to participate in the sale transaction, Reliance would be able to acquire the remaining 26.63% share, based on the “same valuation used for the acquisition of the indirect 73.37% stake,” said the filing. The Mandarin Oriental Hotel Group has a 25% stake in the hotel, and manages the property, according to the New York Post.
Set up in 2003, the 244 rooms-and-suites hotel towering over the south end of Central Park is the latest addition to Reliance’s developing luxury real estate portfolio. It’s also Reliance’s second recent acquisition of an iconic property after British hotel, Stoke Park for $79 million. The conglomerate also has investments in the Oberoi hotels, and is developing a convention center and hotel complex in Mumbai.
The New York hotel caught Reliance’s attention at a time when it has recorded a dramatic fall in revenues due to the pandemic, from $113 million in 2019 to just $15 million in 2020. That may be why Reliance’s deal appears to be a relative bargain, at least compared to the $340 million (pdf) the property was valued at in 2007 for the purposes of a partial sale.
The latest luxury acquisition will pit Reliance in direct competition with another Indian corporate group: the Tatas. Tata Group’s Pierre, acquired a decade, ago, is also located in the vicinity of the Mandarin Oriental.