Istithmar World, a unit of Dubai World, has sold its 50 per cent 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 per cent 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.
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.