Istithmar hands over New York building

DUBAI // Istithmar World Capital, the investment arm of Dubai World, has handed over an apartment building in New York to its lender, Danske Bank, after defaulting on a US$300 million (Dh1.1 billion) mortgage. The move is the latest chapter in Dubai World's continuing restructuring process as it tries to tackle more than $26bn of debt.

"We have hired Jones Lang LaSalle to market the property," said Anders Klinkby Madsen, a spokesman for Danske Bank. "We do not expect further write-downs on the property."In its heyday, Istithmar World built up a portfolio of assets with large amounts of debt. It bought 1446 Broadway, the former Knickerbocker Hotel, in 2006 and had planned to convert it back into a hotel. The company bought a neighbouring lot for $76m, according to New York City property records.

Istithmar also bought a 73 per cent stake in the Mandarin Oriental in New York for $340m in 2007 and the W Hotel Union Square for $285m in 2006. The W Hotel was sold in a foreclosure auction in December for just $2m. Istithmar's lender for the W Hotel deal, 201 Park Avenue South PEH, accused it in a legal filing this week of inappropriately taking $3.2m from a hotel fund that was used for making improvements, Bloomberg reported. Istithmar yesterday declined to comment about the loss of 1446 Broadway and the lawsuit.

Dubai World's debt negotiations have fuelled speculation that Istithmar may try to sell off some assets. Istithmar also owns the luxury retail chain Barneys New York and a 20 per cent stake in Cirque du Soleil. Among the assets possibly for sale is the luxury liner Queen Elizabeth 2, which Istithmar bought for $100m from Cunard in 2007. The original plan was to refurbish it and set it up as a luxury hotel berthed at the Palm Jumeirah, but after the global financial crisis Istithmar said it would try to send it to Cape Town to be used as a hotel for this year's FIFA World Cup finals.

Those plans have since been scrapped after authorities in South Africa said they could not accommodate the ship for the required length of time at the city's port. "There are a number of options being considered for the QE2," the company said in January. David Jackson, who led Istithmar during its high-end purchases, resigned from the company as chief executive in January. @Email:bhope@thenational.ae

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