Dubai World nears Miami hotel stake sale
Dubai, September 2, 2013
Dubai World is close to selling its 50 per cent stake in Miami Beach's landmark Fontainebleau hotel to South Florida developer Turnberry Ltd, three sources aware of the matter said.
The sale will mark an acceleration of asset sales by Dubai World, which needs the proceeds to repay debt. The state entity, which restructured $25 billion of debt in 2011, has already made one major asset disposal this year - the sale of UK logistics warehouse developer Gazeley in June.
The Fontainebleau hotel in Miami Beach in Florida became famous in the 1960s as a playground for stars such as Frank Sinatra, Elvis Presley and Jerry Lewis.
The sale to Turnberry is expected to be signed in a few weeks, one source aware of the talks said.
The sources asked to remain anonymous as the matter is not public. They did not disclose a value for the transaction.
A Dubai World spokesman declined to comment on the sale when contacted by Reuters.
Dubai World had paid $375 million in 2008 for a 50 per cent stake in Fontainebleau Miami Beach. The resort, which borrowed more than $620 million to fund a restoration programme before it reopened in November 2008, had to restructure the loan in 2010.
Dubai World offered $100 million of new equity to lenders as part of a debt restructuring plan.
Turnberry is owned by South Florida's Soffer family. Jeffrey Soffer bought the 1,504-room Fontainebleau hotel in 2005 and the Dubai firm only came on board in 2008.
Most investors are now confident that Dubai will recover from its 2009-2010 crisis, when a property crash nearly forced state-linked companies to default on billions of dollars of debt.
Dubai World had promised to sell non-core overseas assets as part of its debt restructuring plan which secured an extension on its debt maturity from creditors.
The debt restructuring agreement promised full repayment to creditors through a series of disposals of foreign assets mostly bought at peak prices in 2006-07.
The sale of Gazeley in June provided a sign that Dubai World, and other Dubai state-owned entities are taking action to meet debt obligations.
A unit of Toronto-based investment firm Brookfield Asset Management bought logistics warehouse developer Gazeley from Dubai World subsidiary Economic Zones World (EZW) for an undisclosed price.
Other big Dubai World assets have been earmarked for sale under its restructuring plan, including stakes in MGM Resorts and Inchcape Shipping Services.-Reuters