The W New York Union Square will be sold to a partnership led by Host Hotels & Resorts Inc. as part of the settlement to bankruptcy proceedings, the property’s owner said in a statement.
The venture also includes Istithmar World PJSC as a minority partner, according to the statement from LEM, an affiliate of Lubert-Adler Real Estate Funds. Istithmar World is a unit of Dubai World, the sovereign wealth fund that defaulted last year on debt incurred buying the hotel in 2006.
LEM controls an entity that held junior debt on the luxury hotel overlooking Manhattan’s Union Square. Terms of the deal announced today weren’t disclosed in the statement. The parties filed a joint liquidation plan today in U.S. Bankruptcy Court in Delaware.
Gregory Larson, vice president for investor relations of Bethesda, Maryland-based Host Hotels, didn’t immediately return a call for comment, nor did Dean Adler, chief executive officer and co-founder of Philadelphia-based Lubert-Adler. A call to Istithmar’s New York office wasn’t returned.
The transaction may complete a process started in December, when LEM gained control of the property by paying $2 million for a piece of the debt at a foreclosure auction.
Dubai World, a holding company for the Middle Eastern emirate, paid $285 million for the 270-room hotel near the peak of the U.S. commercial property market.
The New York hotel, which features Rande Gerber’s Underbar, is operated by a unit of White Plains, New York-based Starwood Hotels & Resorts Worldwide Inc., the third-largest U.S. lodging company. W Hotel Management Inc. will continue to manage the hotel under its existing agreement.
Hotels Union Square Mezz 1, a junior debt holder, was put into bankruptcy in March by LEM.
The deal should close by Sept. 15, LEM said in the statement.
The case is Hotels Union Square Mezz 1 LLC, 10-10971, U.S. Bankruptcy Court, District of Delaware (Wilmington)