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Dubai eyes sale of Essex House Hotel
Dubai Group, the state-owned investment firm in the midst of a $10 billion debt restructuring, is weighing a potential sale of its prime Manhattan-based real estate property Jumeirah Essex House hotel, it said on Monday.
March 12, 2012 1:46 by Reuters
Dubai Group is a unit of Dubai Holding, the personal investment vehicle of the emirate’s ruler Sheikh Mohammed bin Rashid Al Maktoum.
Selling the property will boost Dubai Group’s finances and trigger a stronger debt negotiating position for the Dubai Holding investment arm which also has stakes in regional investment bank Shuaa Capital, Greek group Marfin Investment Group and Australian company Citigold Corp .
The group, which bought the hotel in 2005, said the move comes as part of a constant review of its asset portfolio and strong investor demand for luxury hotels. Its currently being run by the Jumeirah Group, another unit of Dubai Holding.
“We constantly review our portfolio of assets and will pursue asset sales in the right market conditions,” Dubai Group’s Acting Chief Executive Officer Fadel Al Ali said in an e-mailed statement.
“Current global investor demand for world-class hotel assets such as Essex House provides a timely opportunity to capitalise on the repositioning and operational improvements executed by our team,” he added.
Essex House, the 80-year luxury hotel on Central Park South first opened for business in 1931. Dubai bought the property for more than $400 million from Strategic Hotel Capital LLC, a source familiar with the matter said. At the time of the purchase it said that it would spend $50 million on refurbishing the property.
The source added that Dubai Group expected a likely sale to generate as much as $500 million.
The Wall Street Journal, which first reported the news, said a likely sale may generate between $375 million and $500 million.
Real estate investment advisory firm Silverpeak Real Estate Partners is advising the group on the sale, the source said.
Dubai rattled global markets with its 2009 request for a standstill on flagship conglomerate Dubai World’s $25 billion debt pile.
The emirate has since completed several restructurings at state-linked entities with help from neighbouring emirate Abu Dhabi, including Dubai International Capital and Dubai World itself, while others have dragged on. (By Mirna Sleiman)