'Sell Roosevelt via open bidding'

Committee makes recommendation as Saudi Arabia declines interest

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ISLAMABAD:

A deputy minister-led committee has recommended privatising the valuable Roosevelt Hotel in New York through open bidding after Saudi Arabia failed to show formal interest in acquiring the Pakistan International Airlines (PIA)-owned property.

The special committee has proposed to the Cabinet Committee on Privatisation (CCOP) that the hotel be sold via open and competitive bidding. However, the committee, led by Minister of State for Finance Ali Pervaiz Malik, left it to the Privatisation Commission to decide whether to outright sell the hotel, develop it as a joint venture, or lease it for 99 years.

The concise report by the Ali Pervaiz Committee aims to end a two-year-long uncertainty over the hotel's fate amid an emerging urgency caused by a change in the US administration.

Deputy Prime Minister Ishaq Dar, in his capacity as CCOP chairman, had formed the Ali Pervaiz Committee in November last year under the leadership of Minister of State for Finance Ali Pervaiz Malik. Former central bank governor and PIA Holding Company chairman Tariq Bajwa, along with five secretaries and a legal advisor, were also members of the committee.

The 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.

According to Privatisation Commission sources, the Ali Committee has now recommended to the CCOP that the Roosevelt Hotel be privatised through competitive bidding.

This decision came after the Privatisation Commission informed the committee that no formal offer had been made by any nation to acquire the hotel under a government-to-government arrangement, said the sources.

The lack of foreign interest underscores the reluctance of foreign nations to make significant investments in Pakistan. In October, during a failed attempt to privatise PIA, no foreign government-owned or international private airline had shown interest in acquiring stakes in the national carrier.

The Roosevelt Hotel, owned by PIA, is located in an area considered among the top 1% of the most expensive properties in the world.

Sources said that before reaching its recommendation, the Ali Committee inquired whether there was any serious foreign interest. The Privatisation Commission clarified that under a government-to-government arrangement, a foreign government must formally declare its interest before invoking the Inter-Governmental Commercial Transaction Act. As of late December, no foreign government had shown formal interest, according to the committee's proceedings.

The Privatisation Commission revealed that 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.

In August last year, 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.

Pakistan hired Jones Lang LaSalle Americas as the financial advisor for the Roosevelt privatisation transaction at a cost of Rs2.1 billion. The advisor's fee includes milestone-based payments and a success fee of 0.95% of the sale proceeds.

In June last year, 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, but the Privatisation Commission board rejected this.

The Ali Committee did not make a final decision on the mode of privatization, leaving the choice to the Privatisation Commission, which has full access to the financial advisor's report.

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

The Ali Committee also assessed potential commercial risks to the Roosevelt Hotel. The Privatisation Commission stated there were no immediate risks, though the property was previously at risk of being declared a heritage site, which could have restricted its use and development. This issue was resolved through lobbying by the Foreign Office and the outgoing US Ambassador Donald Blome.

However, the committee was cautioned about potential risks stemming from the policy direction of the incoming Donald Trump administration, particularly regarding migrants. The Roosevelt Hotel is currently leased for housing illegal immigrants, and the deal may not last long under the new administration. Sources have said that the Privatisation Commission also flagged a possibility of the hotel being declared a heritage site again if the deal ends.