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Sant Singh Chatwal: Survivor

by KRIS HUDSON

 

 

Hotel and restaurant developer Sant Singh Chatwal got roughed up in the last commercial real-estate collapse by bankruptcies and lawsuits filed against him by lenders and federal regulators.

But in the current slump he and his jet-setting eldest son, Vikram Singh, are feeling little pain. The family's 150-foot yacht, Fathom, has a nine-member crew, and Vikram just paid $5.4 million for a townhouse at SoHo Mews.

To be sure, the Chatwal empire hasn't survived the downturn unscathed. Two of his nine New York hotels - the original Dream hotel on West 55th Street and the Time hotel on West 49th Street - went delinquent on their securitized mortgages this year, according to Realpoint LLC. The Chatwals had to restructure the loans, gaining lower payments over time for upfront payments on each, Sant Singh said.

But at a time that other developers are contracting, the Chatwals are expanding their hotel-management company by opening trendy hotels in additional corners of New York City, as well as in Miami and abroad.

The initial step in Sant Singh's grand expansion comes Wednesday with the debut of the luxury Chatwal Hotel, an 83-room, $100 million-plus project in a landmark building in the Theater District. Soon thereafter, the Chatwals will open hotels in Chelsea, NoHo and Miami's South Beach modeled after two of their Times Square boutique hotels - the Dream and the Night.

"Our aim is that, with Dream and Night, we will have over 100 hotels within 10 years," Sant Singh says.

His survival through one of the worst markets in decades stems from major changes he made to his strategy after the real-estate crisis of the 1990s. Like some other developers who got crushed back then, he since has taken on less risk by adding equity partners, insulating himself from the woes facing some of his more independent competitors.

"If you have the [intellect] and experience, you can build it back," he said in an interview.

The family's rebound is the latest turn in Sant Singh's roller-coaster ride through global real-estate development and politics that has attracted an array of both admirers and critics, including former President Bill Clinton and U.S. Secretary of State Hillary Clinton. Mr. Clinton attended Vikram's 2006 wedding in India.

In April, Indian President Pratibha Patil presented Mr. Chatwal with the Padma Bhushan, among the highest awards for Indian citizens, for his role in rallying U.S. politicians to support a civil nuclear pact between the U.S. and India, clinched in 2008. Various political parties in India denounced Sant Singh's selection for the award, some citing his past bankruptcies and legal troubles.

"I see it as a great learning experience," He said of his earlier troubles.

Now 64 years old, he stands out in crowd at 6 feet, 1 inch, always wearing a red turban and full beard. He was born in India as the third of eight children of a cantina owner and a homemaker.

He spent three years as a pilot in the Indian navy before moving in the 1970s to Ethiopia, where he managed a friend's restaurants and opened his own. He then moved to Montreal and, in 1979, to New York as he built Bombay Palace into a chain of Indian restaurants.

In the 1980s, Sant Singh started buying hotels on the cheap in the then-depressed Times Square area, which started its renaissance in 1982 when Marriott International Inc. committed to build the massive Times Square Marriott.

But Sant Singh's empire crumbled in the recession of the early 1990s. He was forced to seek bankruptcy protection for a half dozen of his New York hotels, including what is now the Best Western President hotel near Times Square. Along with those bankruptcy filings came lawsuits that dogged the hotelier for the rest of the decade and beyond.

In 1997, the Federal Deposit Insurance Corp. sued Sant Singh in connection with his role as a director of the failed First New York Bank for Business, which had collapsed in 1992 under bad loans on commercial real-estate and co-op conversions. The FDIC alleged that he received more than $12 million in loans from the bank and didn't repay them.

In the interview, Sant Singh countered that First Bank of New York lost less than the $12 million it loaned him because it had sold parts of the loans to other lenders. Executives of the now-defunct bank couldn't be reached to comment. The case ended in a settlement in 2001 in which Sant Singh paid $125,000 but didn't admit guilt.

Controversy found the Bombay Palace, too. The restaurant chain sought bankruptcy protection in 1989 to block the Internal Revenue Service from seizing its restaurants for unpaid taxes. The next year, the U.S. Securities and Exchange Commission simultaneously filed and settled a case against Bombay Palace, its former finance chief and Sant Singh as its chairman, court records show. The lawsuit alleged that Bombay took $2 million from recently acquired Lifestyle Restaurants Inc. to bolster its own financial results.

The lawsuit was settled without a financial penalty. Instead, Bombay Palace, Sant Singh and the chief financial officer agreed not to violate securities laws again. Bombay exited bankruptcy court in 1991. Sant Singh also settled lawsuits brought against him by lenders seeking to recoup losses from his earlier bankruptcies, court records show.

Sant Singh, who became a U.S. citizen in 1994, rebuilt his family's hotel empire by developing and managing properties while bringing in outside investors to provide the equity. That way, he has deep-pocketed partners to rely on for additional capital - something he lacked in the early 1990s, he says. Those partners often are European and U.S. investment funds that he declines to identify.

In such deals, Sant Singh's Hampshire Hotels and Resorts manages the hotels, and the family takes its cut of the hotels' profits in ownership shares. Thus, the family eventually amasses a majority stake in a given hotel by the time its partners have recouped much of their own outlay. The Chatwals currently own stakes in nine New York hotels.

"He's someone who really rode out a tough New York recession [in the 1990s] and bounced back very strongly," said Karim Alibhai, founder of resort developer Gencom Group and a friend of Sant Singh and his family.

Signs of Sant Singh's largesse are evident in both the U.S. and India. In 2006, he organized a seven-day, three-city wedding for his son Vikram, now 38, a part-time Bollywood actor and party companion of Sean "P. Diddy" Combs, among others. The wedding, one of the most grandiose in recent Indian history, was filmed by Discovery Travel.

In the elder Chatwal's 45th-floor penthouse on the Upper East Side, many walls are covered with letters from politicians and photos of him with heads of state. He notes that he helped organize a 2007 New York fund raiser for Mrs. Clinton, then seeking the Democratic presidential nomination, that drew 1,400 people at $10,000 per table.

Sant Singh says his motivation in politics is to foster closer U.S. ties with India. He and his immediate family have directly donated a cumulative $305,000 to national political candidates, almost all Democrats, in the past 25 years, according to Opensecrets.org, which tracks political donations.

"My aim was always building Indian-American relationships," he said. "I was not building anything for myself."

Meanwhile, the Chatwals intend to open at least five hotels in the coming months. In early 2011, they intend to open a 316-room Dream hotel on 17th Street in Chelsea. The $230 million hotel has a distinctive, porthole-dotted facade.

Also set to open are a 108-room Dream in South Beach in October, another in New Haven, Conn., by late 2011 and a 48-room Night in NoHo this spring. Sant Singh and a partner have purchased 10 sites in India for hotels, he said. He foresees a Chatwal Hotel in London.

The chain's trophy property will be the Manhattan Chatwal Hotel, which cost roughly $1.2 million per room to build. The Theirry Despont-designed hotel occupies the former site of the Lamb's Club, the 105-year-old social club once frequented by actors such as John Barrymore. Nightly rates will range from $600 to $800.

 

[Courtesy: The Wall Street Journal. Arlene Chang also contributed to this article.]

August 31, 2010

 

 

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