Hotels Union Square Mezz 1 LLC's Tuesday filing in US BankruptcyCourt in Delaware was intended to provide additional time torestructure the remaining mezzanine-level debt on the 285-keyhotel, a spokesman for the mezzanine entity tells GlobeSt.com. Hesays the mezz-level entity, which was created by LEM Mezzanine, ajunior lender on the hotel, "remains highly leveraged" followingthe previous foreclosure.
In that December 2009 foreclosure sale, Dubai World armIstithmar World Capital lost control of the property. An affiliateof LEM successfully bid$2 million for the W and assumed $212 million of debt.Istithmar had purchased the 20-story property in 2006 for $285million.
More recently, Istithmar has been struggling with a $26-billiondebt load in general and declining room rates on the W inparticular, and defaulted on the property this past fall. In earlyMarch, the former Knickerbocker Hotel, now known as 1466 Broadway,went onthe block after Istithmar defaulted on a $300-millionmortgage.
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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.
