Filed under: Luxury Travel & Hotels
The fallout from the Dubai cash crunch seems to have begun. Dubai-based Istithmar lost control of the W New York Union Square hotel
during a foreclosure auction on Tuesday. The Real Deal reports
that one of the property's lenders LEM Mezzanine, a private equity fund holding a junior portion of the mezzanine debt bid $2 million for the debt on the hotel which Istithmar bought in 2006 for $285 million. Istithmar had also submitted a bid of $2.1 million but they had asked for certain loan changes and so LEM was named the winning bidder taking on $212 million in debt. The hotel will continue on as usual and LEM is banking on an eventual upturn in the tourism market.
What will Istithmar unload next? Two potential targets seem to be Barney's New York which has been rumored to be for sale for a long time. The problem is that no one is willing for pay what Istithmar paid for it ($942 million in 2007) especially at a time when department stores have been going through a deep and painful purge. This year's holiday season could be key for the department store brand. Another target could be the Queen Elizabeth 2, the luxury liner which is supposed to become a floating hotel. Istithmar also owns shares in Yacht Haven Grande, a mega-marina and resort complex in the U.S. Virgin Islands.