Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944

Sonesta International Hotels Corporation



Price Range (2005):

        $42 - $5

Earnings Estimates









         (Sept. 30, 2005)


($, ths)

Total current assets:


Receivables, long term:


Property (net)


Total assets:





($, mil)

Total current liabilities:


Long-term debts:


Finance Obligation:


Total stockholders’ equity:


Total liabilities:




Total common shares outstanding


The investment merit of Sonesta consists of the conversion of choice leisure properties into saleable equities. In that, they are in the forefront of managing a diversified hotel concern in the 21st Century.

The prestigious part of the international leisure world probably got its historic background after the first World War. The elegant hotels of the French Riviera and then the major name hotels in Paris, such as the Grand Hotel, the Plaza Athenée, George V, in London the Dorchester and the Grosvenor House, in Vienna Hotel Imperial and in New York, of course, the Waldorf-Astoria and the Plaza Hotel, represented a distinguished and enviable paradise for the wealthy.

Little is known today, or rather mentioned today, about the history of the Sonnabend family. The father, who established Sonesta almost a hundred years ago, owned the Waldorf-Astoria and later bough thee Plaza Hotel. The Sonesta chain, which was previously named Hotel Corp. of America, in 1969 owned 34 hotels all over the world, including the Carlton Tower in London, the Balmoral Club in the Bahamas, various hotels in Bermuda, and the Plaza Hotel in New York City.

Thirty-five years ago, the standard market capitalization of Hotel Corp. of America, with the prestigious Plaza in the middle, was about $20 million. Today the Plaza is worth $450M. In contrast, Sonesta’s net worth is $15M. With the post-war generation, the various hotel chains like Sheraton, began to benefit from the greater valuation of their hotel accommodations. The so-called super luxury hotels have vastly increased in value. Patient and long-term stockholders handsomely benefited from various cash distributions.

Some chains like Hilton, both in Europe and in America, have remained a single entity, whereas others liquidated their properties and remained smaller entities after cash has been distributed from the sale of individual hotel properties. Sonesta, as it is today, is somewhere in between. The company remained an international hotel company, and is engaged in ownership and operation of various hotels and ships. The current property portfolio is diversified:

Sonesta Beach Key Biscayne
Trump International – Sonesta
Sonesta – Coconut Grove
Royal Sonesta – New Orleans
Royal Sonesta, Cambridge
South Beach, Bermuda

5 Hotels & 3 Cruise Hotels in Egypt

Sharm al Sheikh – Sonesta Beach

Peru (7) – Franchised
Tuscany (4) – Franchised

Brazil – Sao Paulo

The company in its current structure is a hotel company with various interest. With no particular expansion tendencies, it received moderate interest until it began to realize its assets designed for the 21st century. The company’s income statement for the year December, 2004, represents no particular excitement and the stock during that period averaged about $5.00 a share.

        Balance Sheet

        (Sept. 30, 2004)
       ($ mil)

Current assets



Current liabilities


Net property



Long-term debt





Stockholders’ equity


Total assets





Market Value
4M SL x $5 = $20M


Sale and Transfer of Assets


During the 2005 third quarter the Company sold land it owned in Costa Rica for $4.5 million, and reported a $3,950,000 pretax gain after deducting the $450,000 book value of the land and related expenses. Since 1995 the Company had owned the site, which was intended for a new resort, but the development never materialized.


On April 19, 2005, Sonesta Beach Resort Limited Partnership (“SBRLF”), a wholly owned subsidiary of Sonesta International Hotels Corporation (“Sonesta”) completed the transfer of the land and improvements of Sonesta Beach Resort, in Key Biscayne, Florida to a partnership between SBRLP and affiliates of Fortune International, a Miami-based real estate development and brokerage firm (“Fortune”). SBRLP is a 50% limited partner in the new partnership, and affiliates of Fortune are the general partner and a limited partner, together owning a 50% interest in the partnership.

The new partnership, SBR-Fortune Associates, LLP (“SBR-Fortune”), expects that the existing hotel will remain in operation through July 2006, when it will be demolished and construction of a new 5-story resort is expected to begin. It is anticipated that the new condominium hotel will include 300-plus luxury hotel and residential condominium units, restaurants, meeting/function space, a space and other facilities customary to the finest resorts in South Florida.

On April 19, 2005, Sonesta transferred the land and improvements of Sonesta Beach Resort into SBR-Fortune, which is valuing the land at $120 million. Sonesta received $31,011,000 in cash at the closing, and, in addition, an existing mortgage of $29,967,000 on the property was paid off by SBR-Fortune. Sonesta also received an equity position in SBR-Fortune valued at approximately $60 million. This value will be paid to Sonesta out of the first available net proceeds of the sale of condominium units, after repayment of (construction) debt. Thereafter, Fortune will receive its initial $30 million equity contribution, plus any additional equity contributions it was required to make to develop the new resort. Subsequent to Fortune fully recovering its investment, profits will be split equally. Sonesta is not required to fund any additional equity beyond the contribution of the land and improvements. Fortune will have the sole responsibility for arranging financing and completing construction of the new resort.

As of April 19, 2005, will continue to operate the hotel under a token ($1 per year) lease with SBR-Fortune, until such time that SBR-Fortune is ready to commence construction on the new resort, which the parties currently estimate to be in August 2006. Sonesta will receive all operating profits during this period. Sonesta does have the right to cease operations of the existing hotel on 60 days notice, in case revenues are insufficient to cover all expenses.

Once the new condominium hotel is completed, the non-guestroom areas of the hotel, which include restaurants, bars, meeting space, office and storage facilities etc. (the “Hotel Lot”), will be transferred to a newly formed partnership, of which Sonesta is a 70% partner and general partner, and Fortune is a 30% limited partner. Sonesta will operate the Hotel Lot, and will offer a rental program to the buyers of condo units that wish to make their units available for rental to the public.

The cost of closing the existing hotel, including severance payments to employees, finding of vacation pay, pension obligations and other costs, will be paid by SBR-Fortune, up to a maximum of $4 million. The Company believes this will be sufficient to cover these costs.


Summary of Monetary Transaction

(1) Sonesta transfers land valued at $120M to Fortune.

(2) Sonesta receives

 $30,000,000 cash


 $30,000,000 mortgages



     Paid from first sale



Equity distribution after:





















Total est.





Sonesta 50%




Hotel Lot (excluding condos)



Total cash:



     Per share

$45 cash


Hotel Lot est. (10%) 6M

$1.50 ongoing per share income


Monetizing Assets

In early 2005, the company signed an agreement to convert one of its most attractive hotels, the Sonesta Beach Hotel, into a condominium with a partner. This conversion, creating about 300 units with a potential price of $2 million each, representing $600 million revenue potential of which let’s say half goes to Sonesta, is a number that we have to consider seriously. $150 million for a company with less than 4 million shares outstanding is $40 a share.

In the development of the leisure industry, this is a revolutionary but not unique step. People have money to buy condominiums, the same way the super-rich a hundred years ago could stay at the George V in Paris. The agreement which changed the Sonesta is in Table 2.

The financial transactions have made an immediate change in the balance sheet. Sonesta received $30 million and $30 million mortgage money was wiped off its balance sheet and transferred to the joint company. On September 30, 2005, the company was immediately in an attractive position. There is total current assets of $40 million with an additional $15 million filtering in over a period of years, so a total of $54 million, with current liabilities of $15 million.

Sonesta only has not $34 million long-term debt, a reasonable number for the number of real estate properties which the company has and which is valued at around $120 million. Furthermore, the income statement also improved dramatically. For the first nine months earnings were $1.77, and the last quarter $.42 versus a $.91 deficit.

The interesting part is the future conversion of the company by this single deal. According to the agreement, the joint partnership which owns the real estate of $120 million will pay the sale of the first $60 million proceeds from the condominiums to Sonesta. That would mean that theoretically the $60 million will wipe out 100% of long-term and short-term liabilities of the company and create a balance sheet of $40 million immediate short-term assets and an additional $15 million, with no liabilities long- or short-term at all. It is easy to see that the interest savings would add at least $1.50 per share to Sonesta’s earnings.

The agreement then calls for the partnership to retain $30 million and then split the remaining proceeds between the partnership and Sonesta, assuming that this remaining sum would amount to $60 million for Sonesta, meaning about $1.50 per share, it would create a real estate company with no debt and $100 million short-term cash on the balance sheet.

The future of Sonesta, however, is far greater than just the potential numbers from the Sonesta Beach condominium deal. It is operating now on three continents, in about twenty ventures. It has a management team which is theoretically a hundred years old. The company is headed by the Roger Sonnabend who had been at the helm almost forty years. The condition of the world today is for leisure. The world is in a peaceful atmosphere, a transition from the century of war to a century of peace. That means leisure, that means boats, new hotels, joint ventures, international travel. In other words, the Sonesta of $100 million surplus cash and management and only 3.7 million shares is facing a possibility of becoming a company with very meaningful price appreciation possibility.

If Mr. Sonnabend would use the cash intelligently and perhaps convert other properties via condominiums, he will after forty years of being president, represent something worthwhile for the century to follow, the company would be a the forefront of providing leisure accommodation for the lower middle class up to the higher middle class. It would historically be the company which was there at the creation in the 1930s and will continue to be the leader of the leisure industry in the early part of the 21st century.

It is a stock to buy for the 21st century.


Pro-Forma Earning Power (2007)





($1 per share)

Basic income, operating




Interest saving




Income from Hotel Lot








 8x    $36

Cash surplus: $170M


 1x      45

Total Value




Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.



Bunker Hunt Article
Posted October 27, 2014

Lamb Realty.
Posted October 15, 2014

Chiquita Brands International
Posted August 20, 2014

Emerson Radio
Posted August 24, 2014

Evercore Partners Inc.
Posted August 5, 2014

Moelis & Co.
Posted July 22, 2014

Torchlight Energy Resources, Inc.
Posted May 21, 2014

Andrew Racz
Posted May 19, 2014

Royal Nickel Corporation
Posted May 02, 2014

Recorded Interview Robert Schermer, CEO
Posted March 15, 2014

Cowen Group, Inc.
Posted March 5, 2014

Pacific Booker Minerals Inc.
Posted February 4, 2014

Sandstorm Gold Ltd
Posted January 24, 2014

Global X Gold Explorer ETF
Posted January 16, 2014

Bring Back Mr. Giuliani
Posted December 24, 2013

Gold Reserve Inc.
Posted October 15, 2013

Premier Diagnostics Health Services Inc.
Posted September 25, 2013

Almaden Minerals
Posted September 3, 2013

Electric Cars In New York City
Posted August 27, 2013

The World Without Gold
Posted July 2, 2013

Remembering Mr. Churchill
Posted June 10, 2013

Financial Transactions in the Digital Age
Posted May 15, 2013

Senator Chester Crandell ( R ) Arizona
Posted May 7, 2013

Explor Resources Exs V
Posted April 14, 2013

The Gathering Storm
Posted April 9, 2013

Vietnam - West of Hong Kong
Posted March 11, 2013

Vietnam – In Peace!
Posted February 26, 2013

Wisdomtree Investments Inc
Posted January 28, 2013

Explor Resources Inc.
Posted November 28, 2012

Oremex Silver Inc.
Posted September 18, 2012

Alphamin Resources Corp.
Posted July 26, 2012

Harvest Natural Resources
Posted July 20, 2012

The Man Who Was Created by Gold
Posted July 06, 2012

Recorded Interview With Zach Erdem, President
Posted June 20, 2012

Nortec Minerals Corp.
Posted May 01, 2012

The Fundamentals of Chesapeake Gold Corporation
Posted April 16, 2012

Jourdan Resources Inc. (JOR.V)
Posted March 20, 2012

Posted February 27, 2012

Gold Index Bonds - To Avoid the Money Traps
Posted February 2, 2012

Monarch Casino & Resort, Inc.
Posted February 01, 2012

QMC Quantum Minerals
Posted january 19, 2012

African Metals Corp.
Posted December 21, 2011

The Crisis That Almost Wasn’t
Posted December 7, 2011

Posted November 18, 2011

The Crisis That Almost Wasn't
Posted November 15, 2011

Ocean Power Technologies, Inc
Posted October 19, 2011

The Mongolian Economic Miracle
Posted October 12, 2011

H. Hunt
The Son of Bunker Hunt
Posted August 24,2011

Sandstorm Gold
Posted August 15, 2011

"Silver At $200
Posted July 29, 2011

"First Majestic Silver Corp
 Posted July 26, 2011

"Interview with Brian Kirwin,
American Bonanza Gold Corp"

Posted July 21, 2011

"Interview with Ian Foreman
Yale Resources Ltd."

Posted June 16,2011

"Interview with Brandon Mckee
Callinan Mines
By Andrew Racz "

Posted June 1, 2011

"Andrew Thompson Interview Soltoro Ltd."
Posted May 15, 2011

"Great Panther Silver Limited"
Posted March 29, 2011

"The 21st Century's Marshall Plan"
Posted March 17, 2011

"Interview With
Houston Hunt"

Posted February 23, 2011

"Esperanza Resources Corp."
Posted February 23, 2011 

"Douglas Lake Minerals"
Posted January 11, 2011 

"Do not bet against Casablanca"
Posted December 10, 2010 

Posted December 8, 2010 

"Full Circle"
Posted November 19, 2010 

Posted November 8, 2010 

SilverCrest Mines, Inc.
Posted October 26, 2010

Cache Exploration, Inc.
Posted October 22, 2010 

Silvore Fox Minerals Corp.
Posted September 29, 2010 

Almaden Minerals, Ltd.
Posted August 16, 2010 

"The Path Of A Hungarian Immigrant"
Posted August 12, 2010 

"Interview With
Mark Hazout -
Silver Dragon Resources

Posted June 24, 2010

"Who Owns Whom At The Final Tally"
Posted June 15, 2010 

"The World Needs
Bunker Hunt.

Posted May 24, 2010 

"Arafura Resources "
Posted April 15, 2010 

"MF Holdings LTD"
Posted April 7, 2010 

"Quest Uranium Corporation"
Posted April 5, 2010 

"Lynas Corporation, LTD"
Posted March 19, 2010 

"Rare Element Resources LTD"
Posted February 9, 2010 

"Mexco Energy Corporation"
Posted January 4, 2010 

"Claude Resources"
Posted December 16, 2009

"The Silver Spirit"
Posted November 25, 2009 

"... from Casablanca to Monte Carlo."
Posted November 20, 2009 

"Sutter Gold Mining, Inc."
Posted November 16, 2009 

"Whose Friends Are They Anyway?"
Posted November 4, 2009

"U.S. Energy Corporation"
Posted October 28, 2009 

"Harris & Harris"
Posted October 13, 2009

"They Made A Difference"
Posted September 30, 2009 

"Bridge Bancorp, Inc"
Posted September 22, 2009 

"Entree Gold - September 2009"
Posted September 3, 2009 

"Who Lost Mongolia"
Posted August 16, 2009 

"Mongolian Prime Minister Sanj Bayar -
A politician of the 21st century"

Posted July 16, 2009 

"Romios Gold"
Posted July 7, 2009 

"The Grand Alliance"
Posted July 6, 2009 

"Sandstorm Resources, Inc."
Posted June 22, 2009 

"Ireland, Inc."
Posted June 16, 2009 

"The Brave New World! - Gold at $1000"
Posted June 5, 2009 

"Claude Resources, Inc."
Posted May 28, 2009 

"Bullion Management Group"
Posted May 11, 2009

"Golden Hope Mines, Inc. - Retraction"
Posted May 4, 2009 

"Silvercrest Mines, Inc."
Posted April 1, 2009 

"Silver Dragon Resources"
Posted February 27, 2009

"In Gold We Trust"
Posted February 26, 2009

"Entree Gold: An Unusual Asset Accumulation"
Posted February 20, 2009 

"The Ultimate Colorful Fate of Edmond Safra, Bernie Madoff, and Governor Bill Richardson"
Posted January 12, 2009

"Silvermex Resources, LTD"
Posted December 13, 2008 

"Prime Minister of Mongolia"
Posted December 11, 2008 

"US Gold Corporation"
Posted December 1, 2008 

"Rubicon Minerals"
Posted November 5, 2008 

"Gold Coins & The Money Game"
Posted October 29, 2008 

"Gold and the Chinese Millennium"
Posted October 20, 2008

"JNR Resources, Inc."
Posted September 30, 2008

"Three Immigrants In Front Of The Court"
Posted September 24, 2008 

Walter J. Hickel Interview"

Posted September 11, 2008

"The Alaskan Queen"
Posted September 9, 2008 

"Evercore Partners, Inc."
Posted September 3, 2008 

"Stalin In The
White House"

Posted September 2, 2008 

"Cal-Maine Foods Inc."
Posted August 4, 2008 

"The Mongolian Revolution"
Posted July 10, 2008 

"Mongolian Newsletter, First Edition"
Posted July 2, 2008 

"Goldsource Mines, Inc."
Posted July 1, 2008

"The Douglas Lake Story In The Age Of Fear"
Posted June 25, 2008 

"Mongolia: The 10th Richest Country in the World"
Posted June 10, 2008 

"North American Gem, Inc."
Posted June 5, 2008 

"The Emergence of Tanzania"
Posted June 4, 2008

"Tanzania - An Up & Coming Mineral & Agricultural Producer In Africa"
Posted June 2, 2008

"Western Potash Corp.

Posted May 12, 2008 

"Judy Garland &
The Subprime Crisis"

Posted April 29, 2008 

"Altek Power Corp."
Posted April 27, 2008 

"Letter to Prime Minister of Mongolia"
Posted April 24, 2008 

"The Mongolian Manifesto"
Posted April 4, 2008 

"Prime Minister Sanj Bayar of Mongolia Receives The Nobel Peace Prize"
Posted March 17, 2008 

"Olympus Pacific Minerals, Inc."
Posted February 28, 2008 

"Tanzania Gold - Douglas Lake Minerals - Harp Sangha"
Posted February 21, 2008

"Warren Buffett Receives A Call From Franklin Roosevelt"
Posted February 19, 2008

"Gold At 2000!!"
Posted February 14, 2008

"Entrée Gold, Inc"
Posted February 11, 2008

"The Unexpected
Mongolian Dilemma"

Posted February 2, 2008 

"Mongolian Gold"
Posted January 8, 2008

"Sir, Do Not Abdicate"
Posted December 27, 2007

"No More Munich -
The Mongolian Version of 1938"

Posted December 11, 2007

"Watergate Saved Nixon's Life"
Posted November 28, 2007

"The Mongolian Wakeup Call"
Posted November 16, 2007 

"Sanj Bayar -
The Prime Minister of Mongolia"

Posted November 15, 2007 

"Stalin & Chavez"
Posted November 9, 2007 

"Tagish Lake Gold Corp."
Posted November 1, 2007 

"Gold Indexed Bonds"
Posted October 11, 2007

"Jasper Mining Corporation"
Posted September 27, 2007

"Ghengis Kahn Returns"
Posted September 27, 2007

"Interview with Professor William Pfaffenberger - Torch River Resources"
Posted September 22, 2007 

"Interview with
Jim Davis - President of Leeward Capital Corporation"

Posted September 4, 2007 

"Interview with
David Hjerpe - Newmac Resources, Inc."

Posted August 27, 2007 

"The Age of Special "Corporate" Relationships"
Posted August 23, 2007

"Entrée Gold Inc."
Follow Up Report #1

Posted July 24, 2007

"Aldershot Resources Ltd."
Posted July 16, 2007 

"Portal Resources"
Posted June 12, 2007 

"Ghengis Kahn Was Hungarian"
Posted May 31, 2007

"Bayswater Uranium Corp."
Posted May 30, 2007 

"Brilliant Mining Corp."
Posted May 22, 2007

"Golden Valley Mines, Ltd"
Posted April 21, 2007

"Warren Buffett - Franklin Roosevelt"
Posted March 15, 2007

"Rubicon Minerals Corp."
Posted March 1, 2007

"Robert Friedland -
The Man of The Year"

Posted February 21, 2007

"Lexam Exploration, Inc."
Posted February 11, 2007

"My Father Died In Auschwitz"
Posted January 19, 2007

"WisdomTree Investments, Inc."
Posted December 26, 2006

"Entrée Gold Inc."
Posted December 13, 2006

"Aero Mechanical Services, Ltd"
Posted November 17, 2006

"This Year I"m Voting For Dick Nixon"
Posted November 7, 2006

"Global Options
Group, Inc."

Posted November 1, 2006

"The Arrival of the
Nickel Billionaires"

Posted October 18, 2006

"The Kennedy-Nixon debate revisited"
Posted October 4, 2006

"Brilliant Mining Corp."
Posted September 17, 2006

"A Matter of Reasonable Doubt"
Ken Lay - Enron

Posted August 30, 2006

"Silver Wheaton - SLW"
Posted August 28, 2006 

"Silver In The
Twenty-First Century"

Posted August 16, 2006

"The Age of Mediocrity"
Posted July 19, 2006

"Let There Be Sunshine"
Kirk Kerkorian

Posted July 12, 2006

"Oil & Gas
Energy Crisis Solution"

Posted July 3, 2006

"I Am An Immigrant!"
Posted June 7, 2006

"Northern Star
Mining Corp."

Posted May 19, 2006 

"Gateway Gold:
It"s A Gold Story"

Posted May 15, 2006

"Ken Lay's Legacy"
Posted May 8, 2006

"The Principal Guest Was Missing"
Posted April 25, 2006

"J.P. Morgan Offers Advice To Ken Lay"
Posted April 11, 2006

"Pocketful Of

Posted April 8, 2006 

"Midway Gold
Posted March 23, 2006 

"Harvest Gold"
Posted March 2, 2006 
"Sparton Resources"
Posted March 1, 2006 

"Interview with
Robert McEwen-
U.S. Gold Corporation
Posted February 22, 2006 

"A Tribute to
Rudy Giuliani
Posted February 15, 2006
"Your Money Is Not Yours"
-Enron & Martin Siegel, Esq.

Posted February 9, 2006

"Other People"s Money -Enron & Martin Siegel, Esq."
Posted January 28, 2006

"Northern Star Mining"
Posted January 16, 2006 
"Sonesta International Hotels Corporation"
Posted December 29, 2005 

"The Currency of Mass Destruction"
Posted December 5, 2005
"Bunker Hunt-Silver-China"
Posted November 28, 2005

"50 Relatives Worse Than Yours"
Posted November 14, 2005

"Then And Now"
Posted November 9, 2005 

"The Business of Hungary is Business!"
Posted October 31, 2005

"Mr. Prime Minister"
Posted October 13, 2005
"U.S. Gold Corp."
Posted September 29, 2005

Posted September 23, 2005

"Mr Clarke -
Call In The Boys"

Posted September 12, 2005
"A Letter To
President Bush"

Posted September 8, 2005

"Mr. Smith Goes To Hungary"
Posted September 1, 2005
"Orko Gold"
Posted August 18, 2005

 "Near Hit"
Posted August 16, 2005

"An African Queen"
Posted August 11, 2005

"1848 and Beyond"
Posted August 4, 2005



Andrew Racz. 300 East 54 Street, Suite 26C, New York, NY 10022
Phone: (212) 319-6949 Fax: (212) 753-1944. E-mail:

Copyright © 2011 Andrew Racz. All Rights Reserved.