March 8, 2010 by Sal
Back in December 2009, Keynesian wrote an article titled Dubai’s W Hotel-Union Square Sold for $2M where Istithmar World PJSC was forced to accept $2M for its W Hotel in New York at a foreclosure auction, leaving it with a $283M loss. The move was not a surprise and as part of a restructuring program, the debt-laden emirate had to start offloading its portfolio of trophy assets. The highly leveraged portfolio was built during a huge global spending spree at the peak of the oil and property bubble. According to a report by Monitor Group, between 2003 and 2007 Istithmar invested $3.8 billion of its own capital, but took on a further $14 billion in debt. Today, Istithmar is going through a deleveraging process, one that some argue might mark the end of the once notorious investment arm.
On March 3rd, Istithmar lost its second Manhattan property in three months as it defaulted on its $300 million mortgage on the former 300,000 square-foot Knickerbocker Hotel site in Times Square turning the property over to its lender Danske Bank A/S. It was planning to convert the site and an adjacent vacant lot it had purchased for $76 million into a high-end hotel. Moreover, its two properties W Washington D.C. and Mandarin Oriental New York are on credit rating watch lists for performance issues.
If Istithmar learned anything from past experience, it’s that expectations always fall short of reality.END
No comments:
Post a Comment