Dubai World's investment arm says it is downcast at losing the W New York-Union Square hotel at a foreclosure auction while insisting the sale was unconnected to the debt restructuring process of its parent. "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," said a spokesman for Istithmar World.
"We have provided considerable equity and support to W Union Square to help service the debt. Unfortunately, with the downturn [in the New York market] it was not prudent to continue to do that." The New York hotel market has experienced nearly an 18 per cent drop in average daily rates this year. The 270-room hotel was sold to the private equity fund LEM Mezzanine for US$2 million (Dh7.3m) on Tuesday, The Wall Street Journal reported. It said Istithmar World paid about $282m for the property in 2006.
"This is totally unconnected to the restructuring of the debt of Istithmar World's parent company Dubai World," the spokesman said. Istithmar World would not part of that process, Dubai World said last month. Dubai World announced in September that selected hotel assets including the W Union Square had been transferred to Istithmar from Nakheel Hotels. It also owns the Mandarin Oriental hotel in New York, the W Washington hotel, the Turnberry golf resort in Scotland and the Queen Elizabeth 2 luxury cruise ship. It has equity stakes in Kerzner, the operator of the Atlantis and One&Only hotels, and is developing a W Bangkok and W Retreat and Spa-Koh Samui and The Residences at W Koh Samui in Thailand.
There are also concerns surrounding the Fontainebleau Miami Beach resort, in which Dubai World invested about $375m last year for a 50 per cent stake. When asked about the resort, the Istithmar spokesman simply said "we will come to that". Meanwhile, there has been speculation that Dubai World could also be forced to give up control of the luxury retailer Barneys New York. Istithmar has a 50 per cent stake in the $8.5 billion CityCentre casino and resort complex in Las Vegas, which started its phased opening on December 1.
MGM Mirage, its partner in the project, has said that the project is fully funded. @Email:firstname.lastname@example.org