Roosevelt privatisation moves ahead

The government on Tuesday instructed the Privatisation Commission to privatise the lucrative Roosevelt Hotel in New York through competitive bidding but left open the issue of whether to opt for an all-out sale or run the property in partnership.

The decision was made by the cabinet committee on privatisation (cop), based on recommendations by the Ali-Pervaiz committ. Headed by Deputy Prime Minister Isahq Dar, The CCop Adopted the Ali Commissioner. The petroleum minister, Ali pervaz, Chaired the Committee.

The Ali Committee had recommended privatising the valuable Roosevelt Hotel in New York through open bidding. However, it proposed that the most suitable transaction structure for privatisation should be determined by the Privatisation Commission while considering potential risks and the time required to realise full proceeds, which would then be presented to the CCOP for approval.

The Privatisation Commission board had recommended exploring the hotel’s privatisation under a government-to-government mode while keeping all three proposed transaction structure options—outright sale, joint venture, or a 99-year lease—on the table for negotiations.

However, the board’s recommendation was contrary to the financial advisor’s proposal.

The financial advisor proposed three options: a 100% sale of the hotel land, a joint venture with a prospective development partner for future building development, or a 99-year ground lease with an identified developer. The advisor recommended the joint venture option to maximise gains.

According to a statement by the Deputy Prime Minister’s Office, the CCOP reviewed the progress of ongoing privatisation initiatives, including the Roosevelt Hotel in New York. Discussions focused on identifying the most viable way forward. Dar urged the Privatisation Commission to fast-track the privatisation process of the Roosevelt Hotel, the statement added.

On Monday, the Privatisation Commission had informed the International Monetary Fund (IMF) that the privatisation structure of the Roosevelt Hotel would be decided by the CCOP in light of the Ali Committee report.

The New York City government has already issued a notice to terminate the deal effective July—one year before its expiry—potentially resulting in an $80 million business loss. The city government had taken the hotel at $210 per room for the third year.

Sources indicated that the Privatisation Commission also flagged the possibility of the hotel being declared a heritage site again if the deal with the New York City government ended.

Earlier, the CCOP had expressed concerns that President Donald Trump’s anti-immigration policies could impact the $228 million three-year deal. The IMF was informed that the authorities were exploring alternative business options.

Pakistan hired Jones Lang LaSalle Americas as the Financial Advisor for the Roosevelt privatisation transaction at a cost of Rs2.1 billion.

The financial advisor emphasised the joint venture option with a development partner for the future development of a multi-story, mixed-use skyscraper. Based on its experience in the New York real estate market, the financial advisor recommended the joint venture as the most suitable transaction structure for maximising expected proceeds.

However, the Privatisation Commission board raised concerns over potential governance and relationship management issues in joint venture projects between the government and private partners, warning of possible litigation.

According to the financial advisor’s report, under the 100% outright sale option, parties would bid based on the land value at a floor area ratio (FAR) of 30+ with all approvals secured. The successful bidder would also secure all required approvals within three years.

The initial deposit would be provided after approval of the bidding process, and the balance sale price would be paid post-approvals within three years. Even in the case of an outright sale, the proposed time to realise the total sale proceeds is three years.

The financial advisor stated that potential interested parties would be limited in the case of an outright sale. This option carries the lowest risk but also yields the lowest net proceeds for the government of Pakistan.

Under the 99-year ground lease agreement, the financial advisor proposed that parties bid based on land value at FAR of 30+ with all approvals secured.

They would sign a Contribution Agreement after the bidding process’s approval and finalise the ground lease agreement within three years. This option involves long-term participation through fixed payments over 99 years. In this scenario, the government would retain land ownership, and the time to realise proceeds would be 99 years. The financial advisor noted that the number of potential interested parties would be moderate to high in the case of a lease deal.

This option has medium risk and yields the second-highest net proceeds to Pakistan—higher than an outright sale but lower than the joint venture option.

The Ali Committee’s mandate was to evaluate the legal, financial, technical, and international aspects of the Roosevelt Hotel’s proposed transaction structures while considering the evolving politico-economic landscape in the United States.

The Privatisation Commission informed the Ali Committee that no formal offer had been made by any nation to acquire the hotel under a government-to-government arrangement. The lack of foreign interest underscores the reluctance of foreign nations to make significant investments in Pakistan.

The Privatisation Commission stated that under a government-to-government arrangement, a foreign government must formally declare its interest before invoking the Inter-Governmental Commercial Transaction Act. However, no foreign government had shown formal interest, according to the committee’s proceedings.

Pakistan had twice offered the Roosevelt Hotel to Saudi Arabia, first in October and again in November 2024. While meetings were held with Saudi officials, no progress was made, according to the Privatisation Commission.