NEW YORK CITY-A federal bankruptcy judge has confirmed the planfirst announced last month to transfer ownership of the W NewYork—Union Square to a group led by Host Hotels & Resorts LP.LNR Partners Inc., the special servicer on the high-end hotel’s$115-million mortgage, had filed papers last week in US BankruptcyCourt in Delaware objecting to the transfer on grounds that themortgage debt holders hadn’t given their consent.

|

In an order dated this past Friday, Judge Kevin Carey ruled thatthe plan filed by Hotels Union Square Mezz 1 LLC and Hotels UnionSquare Mezz 2 LLC was in accordance with the US Bankruptcy Code andcould proceed. The plan calls for some of the proceeds from thetransfer to be used to satisfy the $61-million claim of seniormezzanine lender DekaBank Deutsche Girozentrale, but otherwiseleaves the mortgage holders out in the cold. A spokeswoman for LNRtells GlobeSt.com the company has no comment.

|

A new Host-led venture will buy the 285-key hotel at 201 ParkAve. South under the plan approved by Carey, with DekaBank beingrepaid and LEM Mezzanine receiving current and future payments onits original mezz loan. An affiliate of LEM had bought the W thispast fall in a foreclosure auction for $2 million and theassumption of $212 million in debt. Hotels Union Square Mezz 1 andMezz 2 filed for Chapter 11 protection this past March.

|

Istithmar World Capital, the Dubai World unit that bought the20-story property in 2006 for $285 million but later defaulted onloans, will be 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 underits existing management agreement.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

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.