The fallout from the Dubai money crisis seems to have started. Dubai-based Istithmar lost control of the W New York Union Square hotel during a foreclosure auction on Tuesday. According to reports, one of the property’s lenders, LEM Mezzanine (a private equity fund holding a junior portion of the mezzanine debt) bid $2 million for the debt on the hotel, which Istithmar bought in 2006 for $285 million. Istithmar had submitted a bid of $2.1 million, but LEM Mezzanine was named the winning bidder taking on the $212 million in debt. The hotel will continue operating as usual and LEM is investing on an eventual recovery in the tourism market.
Two new potential goals for Isithmar seem to be Barney’s New York, which has been rumored to be on sale. However, no one is willing for pay what Istithmar paid ($942 million in 2007). This year’s holiday season could be great for the department store brand. Another aim could be the Queen Elizabeth 2, the luxury liner which is supposed to become a floating hotel. Istithmar also owns shares in Yacht Haven Grande, a mega-marina and resort complex in the U.S. Virgin Islands.