Dubai Forced to Check Out of W Hotel – DealBook Blog – NYTimes.com

Ouch!

In a sign that Dubai World may struggle to keep its prized assets, the sovereign wealth fund’s investment unit Istithmar lost control of its W Hotel in Manhattan in a foreclosure auction on Tuesday for $2 million, after buying the property for $282 million in 2006.

LEM Mezzanine, a Philadelphia private equity firm, ponied up $2 million for control of the 270-room hotel on Park Avenue South. As part of the deal, LEM will also assume $212 million in debt.

via Dubai Forced to Check Out of W Hotel – DealBook Blog – NYTimes.com.

Given that LEM will assume the debt, the haircut on the deal represents a 24% loss.

The banks won’t be hurt by the default, since LEM is assuming the debt load. So they at least have that going for them.

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Filed under finance, Markets, Way Forward

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