Dubai’s Man in Manhattan

As Dubai’s fortunes boomed and its coffers overflowed, it looked outward for investment opportunities. New York’s frenetic real estate market proved tantalizing.

In 2005, Dubai World’s investment arm, Istithmar, and Mr. Farkas bought 230 Park Avenue at a price tag of $705 million. Two years later, as the credit crisis was first making its tremors felt, Mr. Farkas and Istithmar unloaded 230 Park onto Goldman Sachs’ Whitehall Fund and Monday Properties for a staggering $1.15 billion.

In 2006, Istithmar and Mr. Farkas bought the W Union Square for $285 million. Mr. Farkas pulled out of that investment earlier this year. Again, good timing: In early December, Istithmar lost the W Union Square in a foreclosure auction. 

“[W]hen the market started to turn, and Andrew started to see some of the outrageous prices that were being achieved on some of the assets, that’s when he said, ‘Holy cow, now’s the time to get out of here,’” Mr. Lieber said.

Also in 2006, the joint venture bought the leasehold at 450 Lexington Avenue for $600 million. Again, Mr. Farkas cashed out his equity in that property earlier this year.

In 2007, Istithmar and Mr. Farkas bought a 73 percent interest in the Mandarin Oriental, a hotel then valued at $340 million, which they still retain.

 

MEANWHILE, MR. FARKAS kept busy on the other side of the world. He would spend one of every five or so weeks in Dubai, usually staying at Kerzner’s Royal Mirage.

In December 2005, Mr. Farkas’ Island Global Yachting announced that it was partnering with Dubai World’s Nakheel to design, develop and manage all of Nakheel’s marina properties in Dubai, including along the waterfront of the Palm Islands and the World. Istithmar, at the same time, announced that it owned about 25 percent equity in the Island Global Yachting’s projects in Dubai, and in its project in St. Thomas. Mr. Farkas opened an office in Dubai. In 2007, Island Global Yachting opened Festival Marina in Dubai’s Festival City, with, according to IGY’s Web site, “74 berths for motor yachts from 15 to 35 meters in length, plus 24 quay-side berths.”

“Andrew is one of the most aggressive people I’ve ever had the pleasure to work with,” Mr. Lieber said. “Some feel Andrew is so aggressive he may not know when to stop, but I’ve never seen him cross that line.”

Nor did he. Before Dubai World revealed its debt troubles, Mr. Farkas sold his marina interests to a Qatari firm, relinquished his interests in ENSec, and sold his equity stakes in all of his Dubai World joint ventures in New York, save perhaps the most valuable, the Mandarin Oriental hotel in the Time Warner Center.

Of Dubai World’s current predicament, Mr. Farkas said, “Of course they overextended, but so has virtually every market in the world. This is just their turn. The people there are smart, they are very committed to their country, they are commercial, and I have every confidence that with the passage of time, and with the incursion of no small amount of pain, they will come out on top.”

Meanwhile, he plans to redeploy his capital in another real estate venture.

Real estate investment bank Centerline’s Nov. 12, 2009, S.E.C. filing contained a hint that Mr. Farkas might be targeting his real estate investments closer to home: “The Company continues discussions with Island Capital Group LLC, and others, to accomplish a recapitalization of Centerline.”

drubinstein@observer.com