GO
Loading...

UPDATE 1-Dubai sells stake in landmark Miami hotel to Turnberry

Tuesday, 17 Dec 2013 | 2:16 AM ET

* Dubai World unit sells 50 pct of Fontainebleau - source

* Price not revealed; originally bought for $375 million

* Latest asset sale by Dubai state-owned conglomerate

* Will help Dubai meet heavy debt repayments in 2014-2016

DUBAI, Dec 17 (Reuters) - Istithmar World, a unit of Dubai World, has sold its 50 percent stake in Miami Beach's landmark Fontainebleau hotel back to south Florida developer Turnberry, a source close to the seller said on Tuesday.

Dubai World, one of the emirate's big state-owned conglomerates, declined to comment when contacted by Reuters.

Reuters had reported in September that the Fontainebleau deal was close to being completed; the price was not immediately known. Dubai World originally paid $375 million in 2008 for its 50 percent stake in Fontainebleau Miami Beach.

It is the latest in a string of asset sales by Dubai World companies, as the conglomerate steps up its divestment programme following a $25 billion debt restructuring.

Proceeds of asset sales by Dubai's state-linked firms will help to meet a heavy schedule of debt maturities in the next three years, including the first repayment under Dubai World's restructuring plan, worth $4.4 billion and due in May 2015.

The emirate came close to a debt default in 2009 as the global financial crisis triggered a crash of its property market. Dubai's economy is now recovering strongly but bankers are eager to see how the emirate repays roughly $50 billion of obligations coming due between 2014 and 2016.

<---------------------------------------------------------

Factbox on upcoming Dubai debt maturities:

--------------------------------------------------------->

Dubai World initially struggled to offload assets in the aftermath of its debt restructuring deal because of poor market conditions, but it has completed two other exits this year.

A unit of Toronto-based investment company Brookfield Asset Management bought British-based logistics warehouse developer Gazeley from Dubai World subsidiary Economic Zones World in June.

Istithmar World then transferred another landmark hotel, Dubai's Atlantis, to fellow state-owned fund Investment Corp of Dubai earlier this month.

The 1,504-room Fontainebleau hotel became famous in the 1960s as a playground for stars such as Frank Sinatra, Elvis Presley and Jerry Lewis.

Turnberry is owned by South Florida's Soffer family; Jeffrey Soffer bought the Fontainebleau hotel in 2005 before bringing the Dubai firm in as a partner three years later.

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 that restructuring.