NEW YORK CITY-The bankruptcy cases related to the W New York—Union Square have been settled, with LEM Mezzanine agreeing to sell the hotel property to a new venture in which its former owner is a minority member. Terms of the deal were not disclosed; an affiliate of LEM had bought the W this past fall in a foreclosure auction for $2 million and the assumption of $212 million in debt.

Led by Host Hotels & Resorts LP, the new venture will buy the 285-key hotel, the first mezzanine loan in favor of senior lender DekaBank Deutsche Girozentrale will be repaid and LEM will receive current and future payments on its original mezz loan. Istithmar World Capital, the Dubai World unit that bought the 20-story property in 2006 for $285 million but later defaulted on loans, is a minority member of the Host-led venture.

Meanwhile, W Hotel Management, an affiliate of Starwood Hotels & Resorts Worldwide, will continue to manage the hotel under its existing management agreement. In a joint statement, the parties to the settlement say the Union Square hostelry “is positioned to continue its role as a leading hotel in the New York City luxury hotel market.”