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The hotel group co-founded by former discotheque impresario Steve Rubell may be forced to sell the $225-million chain to settle his estate, the company's chief financial backer and Rubell's partner both said yesterday.
Rubell, who once ran Studio 54 and who owned a one-quarter stake in the Morgan hotel group, which he founded with his longtime partner Ian Schrager, died last Wednesday at age 45.
The group's financier, Manhattan developer Philip Pilevsky, who heads investment groups that own half interests in the four super-chic and highly successful hotels, said that because of the soaring price of hotels the tax burden may be huge.
"The hotels are worth so much money and so I'm sure the estate might have a tremendous tax burden," Pilevsky said in an interview. "That could possibly force a sale of some or all of the hotel group." He said that even if estate taxes do not force a sale, it "could affect expansion" plans that included hotels in Los Angeles, Miami, Boston and possibly other U.S. cities and in Asia, Canada and Europe.
"It may very well be that the interest of Steve's family is to sell or liquidate," Schrager, 42, said in an interview, adding he hopes that is not the case. "It could also mean that the other partners buy out his share or another person is brought in to buy Steve's share."
Thomas McConnell, manager of the hotel consulting group at the Laventhol & Horwath accounting firm, who has been a chief adviser to Rubell and Schrager, confirmed that the estate tax burden would likely be huge and said it would be difficult to sell...