After Atlantis The Palm sale, Dubai World unit sells 50% stake in US hotel

Istithmar World, a unit of Dubai World, has sold its 50 per cent stake in Miami’s iconic Fountainebleau Hotel back to south Florida developer Turnberry, with the deal said to be 'profitable'.

The Fontainebleau Miami Beach Hotel. Fontainebleau via Bloomberg News

Istithmar World, a unit of Dubai World, has sold its 50 per cent stake in Miami’s Fountainebleau Hotel back to the south Florida developer Turnberry.

The value of the transaction was not disclosed.

A person close to the transaction said yesterday that the deal was “profitable” for Istithmar but gave no further details.

According to the Miami Herald, the deal includes an “earnout agreement” under which Istithmar will receive an additional bonus from the sale if the state of Florida legalises commercial gambling.

Istithmar acquired the shares in the Miami hotel from Turnberry in 2008 for US$375 million.

The hotel, which opened in 1954, was a favourite haunt of Frank Sinatra and featured in the James Bond film Goldfinger and Brian De Palma’s Scarface.

The sale of Istithmar’s shares was widely expected, as Dubai World and its subsidiaries look to divest assets to help pay down loans of about $4.4 billion.

Dubai World spent billions of dollars acquiring domestic and foreign assets before the global financial crisis drove down asset prices.

The investment company of the Dubai Government stunned global financial markets in November 2009 when it said it would miss a payment on some $24bn of debt.

In March 2011, it struck an agreement with creditors to restructure $14.7bn of bank loans. The first payment of about $4.4bn is due in May 2015.

Earlier this month, Istithmar announced the sale of Dubai's Atlantis Hotel for an undisclosed sum to Investment Corporation of Dubai (ICD), the Dubai Government's investment arm.

Istithmar also owns the entertainment company Cirque du Soleil and the United States luxury retailer Barneys.

“Everyone knows Istithmar is in a selling mood; they’re selling assets when the timing and offer price is right,” another person with knowledge of the situation said yesterday.

In June, Dubai World sold its equity in Britain-based logistics company Gazeley to Brookfield Asset Management for an undisclosed sum.

Istithmar World and Dubai World declined to comment.