A block-full of landmark New York City real estate is being sized up for the auction block in the fallout of the Dubai debt crisis rocking global markets.
Dubai, one of seven states in the United Arab Emirates, said last week it will ask creditors for a six-month freeze of its debts as it attempts to pay them down. The effort may include the sale of noncore assets such as:
* The Jumeirah Essex House, the 78-year-old, 43-story luxury hotel on Central Park South whose iconic rooftop sign is a landmark in the city.
* Knickerbocker Hotel, the John Jacob Astor-built Times Square Hotel on the southeast corner of 42 Street and Broadway in which, legend has it, the martini cocktail was invented.
* Barneys New York, the famous, upscale apparel chain that Dubai’s Istithmar unit purchased 26 months ago for $937.4 million, but which has struggled under the weight of the recession.
Aiden Birkett, a senior restructuring expert from global accounting firm Deloitte, on Friday was winging his way from London to Dubai to begin the lengthy task of poring over the books of Dubai World in an effort to help the sovereign investment firm crawl out of a $59 billion debt hole.
Deloitte was hired late last week by the Emirate of Dubai to begin an emergency restructuring of the $59 billion debt pile after the government announced that it wanted to delay paying creditors due to the rigors of the global economic downturn.
One of the most pressing tasks ahead for Birkett is to draw up a list of assets deemed “noncore” that could be sold off in a hurry to raise much-needed cash to be used to satisfy hordes of creditors, sources close to Deloitte told The Post.
Dubai World, through its Istithmar investment arm, also owns the New York W and Mandarin Oriental hotels.
“Dubai World has significant high-profile assets in the United States and elsewhere in the world, and it is clearly a priority in any restructuring to determine which assets are strategic or nonstrategic,” said Richard Fox, head of Middle East and Africa sovereign ratings at Fitch, the credit-ratings agency.
“Those that are not strategic should be sold if the market supports the right price,” he added.
A source close to Deloitte pointed out that New York assets like The Oriental and the W were very valuable brands that command a global presence.
It has also long been speculated that Barneys could be sold off by the Dubai investment firm if a buyer — willing to pay close to the almost $1 billion price the Emirate paid for it two years ago — could be found.
A spokesman for Deloitte in London said it was too early to guess what will or will not be on Birkett’s list for Dubai World, but added: “The priority with Dubai World is to look at the business as a whole and work out what is and what is not core. It may well be the case that selling some of those noncore assets would be a reasonable way to reduce its liabilities.”
Some of the debt is due as soon as mid-December.
Exposure of US banks to the debt is said to be minimal.
Still, some are wondering if the move by Dubai will spark similar moves by other sovereign funds.