New Owner of W Union Square Hotel Files Chapter 11 Bankruptcy to Forestall Foreclosure Sale

LEM, an entity controlled by Lubert Adler, foreclosed on the previous owner, a unit of Dubai World barely 3 months ago.

Palm Coast, FL – March 25, 2010 – Hotels Union Square Mezz 1, an entity created by Lubert Adler affiliate LEM Mezzanine, filed for bankruptcy Tuesday to forestall a foreclosure sale of New York’s trendy W Union Square Hotel scheduled for Wednesday. LEM foreclosed on the previous owner, a unit of Dubai World barely 3 months ago. Philadelphia-based real estate investment company Lubert Adler is the financial partner of Palm Coast real estate developer Bobby Ginn.
LEM Mezzanine, an affiliate of Lubert Adler Partners, purchased the trendy W New York Union Square December 8, 2009 at a foreclosure auction for $2 million. It was reported at the time that LA had to bring current an additional $97 million in secured debt as part of the deal. LEM also assumed the debt on two mezzanine notes in addition to the mortgage. A month after the sale, senior lender DekaBank Deutsche Girozentrale announced its intent to foreclose unless loan payments were brought up to date. According to the filing, DekaBank is owed $60 million. They are the largest unsecured creditor.
LEM’s filing states that it owes creditors between $100 million and $501 million.
The W was purchased by Dubai World’s private-equity arm, Istithmar, for $285 million in 2006. It defaulted on $117 million in junior debt in October. The default triggered the foreclosure auction. LEM did not have to lay out any cash to complete the purchase. As a subordinate debtor, they went into the auction with a $20 million credit.
4 replies
  1. Ken
    Ken says:


    LEM is a company separate and distinct from Lubert-Adler. While Adler and Lubert are partners in LEM, the Lubert-Adler funds that are partners with Bobby Ginn have no interest in the W hotel.

  2. rk
    rk says:

    yeah…see the big picture…

    you fail to see the underlying significance…if Lubert Adler and or it subsdiaries’ portfolios have fallen on hard times, what will its residual impact be to the portfolios that currently fund Ginn properties? this has huge implications to the viability of LA’s ttl programs…remember that the Niklaus course @ reunion is also in danger of foreclosure and is under a development note in LA’s name…

  3. ken
    ken says:

    I fail to see the significance?

    Brother – everyone with legacy real estate assets has fallen on hard times. LEM is a mezzanine lender, Lubert-Adler is an equity investor. What happens at LEM has nothing to do with the L-A portfolios and vice-versa. Ginn’s issues have nothing to do with LEM. To imply that in the least is inaccurate.

  4. Milton
    Milton says:

    LA and BG

    come on people….dean adler and bg are white collar crooks. their antics have been evident since 2004 and they leave nothing but destruction in their paths. you can talk about la and bg until hell freezes over, but it is what it is.
    they have left 1 community in sc w/o a club house, homes in foreclosure and selling any home without taking a huge loss is nonexistent. there are many visible items to show off their disgusting grandiosity. all of it being at the cost of residents. many are still questioning how la and bg were able to destroy a community and then walk away without a second glance.
    all was well prior to bg/la, but one had to be blind or a total idiot not to question what they were doing with flashes of mega money and pricing that tripled overnight!
    one just needs a brain not doubt what was taking place. innocent folks are left with the arrogance and greed.

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