Istithmar Hotels, a Dubai government-owned firm, announced Monday that it had acquired the classic, Beaux-Arts style Knickerbocker Hotel in New York's Times Square for $300 million.
Istithmar, which means investment in Arabic, hopes to restore the 1906 building to its former splendor by making it into a five star hotel, remaking the hotel after decades of use as office property.
Knickerbocker is a premier property in one of the world's most recognized locations, said David Jackson, chief executive of Istithmar PJSC, which is the parent company of Istithmar Hotels. The most fascinating thing about this property is not its design but its history.
The building, one in a series of grand hotels built by the Astor Family during the late 19th and early 20th century, was a destination point for the theater crowd that frequented the area.
Head of real estate for the Istithmar Hotels, Richard Johnson, said there were various growth opportunities across several sectors in and around Times square.
In particular the absence of high quality hotels in the Times Square area gives us a huge opportunity to develop this area, making it highly compelling.
The building was acquired from Sitt Asset Management which bought the building in 2004 for $160 million.
The purchase by Istithmar - a holding company focusing on private equity, real estate and other alternative investments - took place a week after it purchased the 60-store Loehmann's retail chain.
Other Dubai government-owned firms have recently made investments in the U.S. market. Last September in another hotel purchase, Dubai Holdings bought the Essex House Hotel in Manhattan for $500 million. That building is now being run by the Jumeirah Group, the company's hotel arm.
Istithmar's acquisition of U.S. properties comes after Dubai's controversial purchase earlier this year of British shipping giant Peninsular and Oriental Steam Navigation Company. Opposed strongly by the U.S. lawmakers, Dubai Ports World (DP World) relinquished its right to operate a series of major ports in the country.
In a separate $1.27 billion deal last month, Dubai International Capital took control of Doncasters Group, a British engineering firm that owns a company supplying parts to the military.
Other investments related to the U.S. market by Dubai firms include a $1 billion portfolio of over 21,000 apartments across the southeastern part of the nation and another $1 billion investment to obtain of 2.2 percent of automotive company DaimlerChrysler AG.