Dubai World’s Istithmar Loses Control of the W Union Square Hotel
Bloomberg reports: Dubai World’s Istithmar unit lost control of the W New York Union Square hotel in a foreclosure auction after investing in the property near the top of the commercial real estate market.
LEM, an affiliate of Lubert-Adler Real Estate Funds, won an auction for the mezzanine debt on the luxury Manhattan hotel, which was purchased by Istithmar in 2006 for $285 million. LEM bid $2 million for the debt.
"We are pleased to have completed this step to assume ownership of the W New York Union Square," the buyers said in a statement today. "Despite the recent downturn of the hotel industry, and the defaults that led to today’s foreclosure auction, we are optimistic about the future. Our intention is to ensure a seamless transition of ownership."
State-owned Dubai World is seeking a "standstill" agreement with lenders as it attempts to restructure $26 billion of debt. Istithmar shelled out $665 million for two New York hotels, the W Union Square and the Mandarin Oriental, whose sale prices each broke a local record of $1 million per guest room, according to Real Capital Analytics Inc. Dubai World amassed more than $4 billion in debt buying trophy hotels and office buildings in the U.S., Real Capital data show.
The mezzanine debt of $117 million on the W New York, named by Conde Nast Traveler as one of the world’s top 500 hotels in 2005, was divided into three parts, with LEM holding one portion, according to Ben Thypin, senior market analyst at Real Capital, a New York-based research firm.
See RCA's recent Global Currents article "Mapping the Dubai Surprise."
View the full article on Bloomberg: Dubai World’s Istithmar Loses Control of the W Union Square Hotel
Articles related to this topic:
Return to lender: U.S. hotel owners going delinquent on debt
Dubai crisis jolts markets, but early fears ease
Dubai Trophy-Property Sale Is Well-Timed
Dubai's Crazy Quilt of Assets
Mandarin Oriental May Acquire Luxury Hotel Brands
Dubai Market Plunges for Third Day Amid Uncertainty
Chapter 12: A New Identity
Posted by: Matthew Stone