The Real Deal New York

Abu Dhabi fund ups stake in Park Lane Hotel as part of 1MDB funds recovery

Justice Department seized $140M interest from Jho Low
February 06, 2019 04:00PM

Jho Low and the Park Lane Hotel at 36 Central Park South (Credit: Getty Images and Google Maps)

Abu Dhabi sovereign wealth fund Mubadala Investment Co. increased its stake in the Park Lane Hotel as part of the U.S. government’s effort to recover monies tied to Malaysia’s 1MDB scandal.

The sale came after fugitive Malaysian financier Low Taek Jho, known as Jho Low, dropped his claims to the property in a forfeiture lawsuit, Bloomberg News reported.

About $140 million for the interest in the hotel was transferred to the U.S. government around Dec. 10.

The Justice Department seized Low’s stake following allegations that he bought it with money stolen from Malaysia’s state-owned 1MDB fund. The department had been seeking to seize nearly $1.7 billion in assets tied to money diverted from 1MDB.

The 1MDB fund, which was established under Malaysia’s previous prime minister Najib Razak, has come under scrutiny under the new administration, led by Mahathir Mohamad. The Malaysian government is also seeking the whereabouts of Low, who allegedly masterminded the disappearance of $4.5 billion from the fund.

Potential new lenders have been notified about the change in ownership, the report said. Mubadala, the Witkoff Group and partners — hotel manager Highgate Hotels and New Valley, a unit of Vector Group — hired the Newmark Knight Frank debt team led by Dustin Stolly and Jordan Roeschlaub to refinance the 631-room hotel. They are seeking a $600 million floating-rate loan.

Dustin Stolly and Jordan Roeschlaub

Proceeds will be used to pay down the existing loan, and for additional air rights and renovations. The value of the land is estimated to be more than $1 billion.

The Park Lane Hotel was developed in 1967 by the late billionaire Harry Helmsley. A Helmsley family trust owned it until Witkoff and entities affiliated with Low bought it in 2013 for about $654 million. Later that year, Mubadala paid Low $135 million for a portion of his stake in the hotel.

Last month, professional services firm Deloitte also became embroiled in the scandal. The UK-based firm was fined $535,000 by the Malaysian government after it allegedly failed to report irregularities found in audits of companies linked to the 1MDB fund. [Bloomberg] — Meenal Vamburkar