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W Hotel Auctions for $2M

NEW YORK CITY-Foreclosure proceedings were initiated last month after Istithmar, which bought the hostelry for $285 million, defaulted on its debt.

By Paul Bubny | Updated on December 09, 2009

NEW YORK CITY-The W Hotel New York in Union Square, which a Dubai World unit had bought for $285 million in 2006, has sold in a foreclosure auction to one of the property’s lenders. The winning bid by 201 Park Avenue South PEH, LLC was $2 million, and the bidder also assumes $212 million in debt on the property.

In a statement, the bidder, an affiliate of private equity fund LEM Mezzanine, counts itself “pleased” to have completed this step toward equity ownership of the property. “Despite the recent downturn of the hotel industry, and the defaults that led to today’s foreclosure auction, we are optimistic about the future,” according to the statement. “W is an excellent brand, Starwood is a premier hotel operator, and this destination hotel is well situated in one of New York City’s best locations. Our intention is to ensure that the hotel continues to be well run and is made ready to take full advantage of any future market recovery.” LEM acquired a portion of the mezzanine debt on the property in 2007, and foreclosure proceedings began last month after a series of defaults.

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