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Istithmar loses millions
Istithmar World, part of Dubai World, lost rights to the W Union Square New York hotel in a foreclosure auction in the New York.
December 9, 2009 12:40 by Dana El Baltaji
Dubai World’s saga continues to make headlines worldwide as Istithmar World, the conglomerate’s investment arm, lost rights to the W Union Square New York hotel in a foreclosure auction on Tuesday, reports The Wall Street Journal. The 270-room luxury hotel was put up for auction after Istithmar defaulted on a $117 million in junior debt in October.
In September, the investment firm’s first $115 million mortgage was shifted to a company that handles potentially bad loans.
The hotel, which Istithmar bought for $282 million for a 90 percent stake in October 2006, and later paid another $4 million in June 2009 for the remaining 10 percent, was sold to LEM Mezzanine, a private equity firm, for $2 million.
Initial biddings for the hotel were as low as $100,000.
Istithmar invested over $27 billion in companies worldwide, paying premium prices for stakes in iconic corporations. The investment arm allegedly paid only $2.5 billion in cash for it investments, and used credit secured from banks globally to fund most of its spending spree, Bloomberg reported in September.
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