Steve Roth on Hotel Pennsylvania Renovation Plans

During Vornado’s 4th Quarter conference call, Jamie Feldman, a REIT Equity Research Analyst at Bank of America Merrill Lynch, asked the illion dollar question to Mr. Roth

Q: “…how should we think about Hotel Penn? Do you think you keep it hotel? Or is it too early to tell?”

Mr. Roth replied:

A: “The answer is, while we are zoned for a 3-million-foot tower — a financial services headquarters tower, and as I tell my children, you have to look at the deals that almost happened, so that was a deal that almost happened when we were — we had 2 huge investment banks on that at one time. In any event, the — it looks to me like the math does not support a tower today. We are nothing if not realistic, and our plan is — I wanted to say our current plan, I’m going take out the word “current.” Our plan is to redevelop the Hotel Pennsylvania. Our objective there is multiples. Number one, we own that building for — in the low hundreds of millions of dollars. It’s worth 6x that or more. So our first objective is to get the hotel to be an asset to the neighborhood, not so much to make money in the hotel but to improve the neighborhood so that the value of our 7 million square feet of surrounding office space goes up. So that means we have to focus very hard on the lobby experience, on the hotel — on the restaurant experience, the nightlife experience, what have you in that. The second is to make money on the hotel. And we believe every dollar that we put into that hotel in terms of renovation will be rewarded with very, very significant double-digit financial returns. Our third objective is to harvest some of the capital that we have in that building because the building is worth a lot of money, will become worth a lot more, and we have no debt on it and what have you. So that’s our financial objective and our environmental objective, if you will, with respect to the hotel.”

With that two things come to mind:

1. The plans for the office tower, have not been scrapped, just temporarily sidelined?
2. What two investment banks were “on” at that time?