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September 3, 2013 5:54 pm
Dubai is in advanced talks to offload its stake in Miami Beach’s Fontainebleau hotel, which featured in the James Bond film Goldfinger, as the Gulf emirate accelerates its asset sales to repay debt, people aware of the matter say.
State-owned Dubai World’s investment arm could within weeks sell its 50 per cent holding in the property to Turnberry, its partner in the hotel, if the Florida-based developer was able to raise enough funds, the people said.
If completed, the sale would generate at least $360m, according to one person familiar with the process. Istithmar World, which is Dubai World’s investment arm, paid $375m in 2008 for its stake in the property.
However, another person close to Istithmar says the complicated transaction – made up of various components including debt, the partners’ expenditure, and future earnings – would generate even more “value” for the company, leading to a “significant profit”.
Dubai World, which controls one of the emirate’s most prized assets, ports operator DP World, declined to comment. Turnberry was not immediately available for comment.
Opened in 1954, the oceanfront hotel became a popular spot for Hollywood stars, such as Frank Sinatra.
Turnberry bought the 1,504-room property in 2005, borrowing to fund a $1bn refurbishment ahead of a grand reopening in 2008 marked by performances from pop stars Usher and Maria Carey.
Dubai World was then hit hard by the global financial crisis, dragging the emirate into a sovereign debt crisis when the group said it would not be able to repay its debts in November 2009.
Restructuring debts of $25bn in 2011, the conglomerate agreed to sell off its global assets, which include stakes in a Las Vegas Casino and Cirque du Soleil.
Dubai World earlier this year sold UK logistics firm Gazeley to Brookfield Asset Management.
The transaction came after 90-odd creditors complained that the Dubai entity was not disposing assets fast enough to meet a September 2015 deadline for a first principal repayment of around $4.5bn.
Dubai is enjoying a surge in its tourism and trade sectors, with the real estate sector rebounding as the government seeks to pay down its $110bn in debt.
Dubai World last year consolidated control over the popular Atlantis hotel on Dubai’s man-made Palm Island, buying out partner Kerzner International for $250m in 2012.
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