Hotels Union Square Mezz 1 LLC's Tuesday filing in US Bankruptcy Court in Delaware was intended to provide additional time to restructure the remaining mezzanine-level debt on the 285-key hotel, a spokesman for the mezzanine entity tells GlobeSt.com. He says the mezz-level entity, which was created by LEM Mezzanine, a junior lender on the hotel, "remains highly leveraged" following the previous foreclosure.
In that December 2009 foreclosure sale, Dubai World arm Istithmar World Capital lost control of the property. An affiliate of LEM successfully bid $2 million for the W and assumed $212 million of debt. Istithmar had purchased the 20-story property in 2006 for $285 million.
More recently, Istithmar has been struggling with a $26-billion debt load in general and declining room rates on the W in particular, and defaulted on the property this past fall. In early March, the former Knickerbocker Hotel, now known as 1466 Broadway, went on the block after Istithmar defaulted on a $300-million mortgage.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
