Dubai World's investment arm Istithmar World has lost control of the W New York Union Square hotel in Manhattan. The 270-room hotel was sold to the private equity fund LEM Mezzanine for $2 million at a foreclosure auction yesterday, after Istithmar World paid about $282 million for the property in 2006, The Wall Street Journal reported. "We are disappointed that the lender has chosen this route as we felt that real progress was being made in negotiations with the various lenders to restructure the debt of W Union Square for the future," a spokesman for Istithmar World said in a statement.
"We have provided considerable equity and support to W Union Square to help service the debt. Unfortunately, with the downturn it was not prudent to continue to do that." Istithmar World said that the sale of the hotel was unrelated to Dubai World's debt restructuring process. Dubai World said last month that Istithmar World would not be part of that process. "This has no impact on the operation of the hotel," the spokesman added. "It's business as usual. It is the ownership of the equity that changes."