Beyond the drama of the big numbers, here's a helpful explanation of what happened to the W Union Square Hotel, which had a fun and dramatic foreclosure auction yesterday. (Union Square! Such carnage, all around!) "Basically, Dubai World (or its investment arm, Istithmar) paid $282 million in total for the hotel, and took out a $115 million mortgage. Istithmar put down $50 million of its own money, and borrowed the rest in what's known as a 'mezzanine' transaction: $117 million of high-yielding debt which isn't secured against the property.... Lots of people are extremely worried about commercial real estate at the moment, saying that it's the next shoe to drop. But a $240 million valuation still works out at almost $800,000 per room, which is still a lot of money for a hotel which no one likes very much." Amen to that.
Wednesday, December 9, 2009
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now can we bankrupt the design aesthetic that has every person in America making their apartments and bedrooms look like a W Hotel?!
I like how the bidding started and $100,000 for the whole hotel and only made it to $2 mil. Most of that debt will get blown away and/or radically haircut. What a bargain.