{"id":9220,"date":"2015-11-12T16:35:28","date_gmt":"2015-11-12T16:35:28","guid":{"rendered":"https:\/\/forumarchives.tmsites.net\/index.php\/2015\/11\/12\/fontainebleau-goes-on-the-market-asking-price-650m\/"},"modified":"2015-11-12T16:35:28","modified_gmt":"2015-11-12T16:35:28","slug":"fontainebleau-goes-on-the-market-asking-price-650m","status":"publish","type":"post","link":"https:\/\/forumarchives.tmsites.net\/index.php\/2015\/11\/12\/fontainebleau-goes-on-the-market-asking-price-650m\/","title":{"rendered":"Fontainebleau goes on the market \u2014 asking price $650M"},"content":{"rendered":"


\n\"\"
\n\tFontainebleau, a shuttered project at the north end of the Las Vegas Strip.<\/span><\/p>\n

\tennifer Robison, Las Vegas Review-Journal \u00b7 November 11, 2015 at 6:40 pm<\/p>\n

\t1
\n\tAvailable on Las Vegas\u2019 hot real estate market: One hotel tower, never occupied, just two owners. Great fixer-upper with retail, convention, condo and theater space \u2014 all yours for $650 million, give or take a few dollars.<\/p>\n

\tBut Fontainebleau, mothballed since 2009, is more than mere investment opportunity. Brokers with CBRE Las Vegas, who listed the property Wednesday, say its for-sale sign marks the last gasp of Southern Nevada\u2019s devastating economic downturn. After Boyd Gaming\u2019s defunct Echelon and El-Ad\u2019s halted Las Vegas Plaza on the New Frontier site, Fontainebleau is the last Strip megaresort started in the downturn and still waiting for its second chance.<\/p>\n

\t\u201cLas Vegas didn\u2019t just have a recession, it had a depression,\u201d said John Knott, executive vice president of CBRE Las Vegas. \u201cWe\u2019ve come a long way. Gaming companies are investing in and renovating properties. Local gaming numbers are starting to show improvement. New projects are bringing vibrancy to our community. I believe the recession is behind us now.\u201d<\/p>\n

\tFew projects symbolize the city\u2019s economic ups and downs like Fontainebleau, planned for 3,875 hotel rooms and condominiums. Construction on the 730-foot building \u2014 the Strip\u2019s tallest hotel tower \u2014 began in 2007, with an estimated completion price of $3 billion. Its original developers, Fontainebleau Resorts of Miami, spent $2 billion and two years on the project before the economy crashed.<\/p>\n

\tFollowing the global banking crisis in 2008, nervous creditors shut off the resort corridor\u2019s money spigot. Fontainebleau\u2019s lenders, including Bank of America and JP Morgan Chase, canceled $770 million in loans for the tower in April 2009; Fontainebleau Resorts filed for Chapter 11 bankruptcy two months later, its hotel 70 percent complete.<\/p>\n

\tBillionaire corporate raider Carl Icahn bought the tower out of bankruptcy in January 2010 for $150 million.<\/p>\n

\tNearly six years later, the time is right to sell, said brokers with CBRE Las Vegas.<\/p>\n

\tThe shuttered Riviera next door is set for a $2.5 billion refashioning as an expansion of the Las Vegas Convention and Visitors Authority\u2019s Convention Center District on Paradise Road. The revival of Echelon as Resorts World Las Vegas, plus the Plaza Las Vegas as Alon, suggests both available capital and consumer demand for new rooms in the next half decade. Visitor volumes and average daily room rates have returned to record levels, and local hotel-occupancy rates are back above 90 percent, said Michael Parks, first vice president with CBRE Las Vegas.<\/p>\n

\t\u201cThe time is ideal to realize the potential of this incredibly valuable piece of Las Vegas real estate,\u201d Parks said.<\/p>\n

\tWrap on building called nonissue<\/p>\n

\tBoth Parks and Knott said the decision to sell the property had nothing to do with a Nov. 4 agreement between the Clark County Commission and Icahn forcing the investor to wrap 10 stories of the tower\u2019s west side in paint and fabric to hide rusty building panels from Strip view. Work on the cover is scheduled for completion in mid-2016.<\/p>\n

\tClark County Commissioner Chris Giunchigliani, who spearheaded efforts to shelter the tower, didn\u2019t return a call for comment by press time.<\/p>\n

\tWrap spat or not, Chris Jones, managing director and head of equity research in North America for investment bank Union Gaming Group, agreed it\u2019s the right time to sell.<\/p>\n

\t\u201cI think this is as good as it\u2019s going to get, absolutely,\u201d Jones said. \u201c(Average daily room rates) have strengthened up and down the Strip, and that\u2019s given people the belief that the Strip can support more hotel rooms.\u201d<\/p>\n

\tAlso, that $650 million price isn\u2019t out of line with other unfinished megaresorts, though Fontainebleau comes with less land, at just under 23 acres.<\/p>\n

\tThe largely unfinished Echelon, on 87 acres, sold to Genting Berhad of Malaysia for a reported $350 million in March 2013. A consortium including Crown Resorts of Australia, former Wynn Resorts executive Andrew Pascal and investment firm Oaktree Capital Management paid $260 million to buy the vacant, 35-acre New Frontier parcel in August 2014.<\/p>\n

\tIt\u2019s not clear whether Fontainebleau will also draw outside buyers new to the market, but Knott said CBRE Las Vegas is marketing the property to both existing gaming companies and investors from Asia and other continents.<\/p>\n

\t\u201cEveryone we\u2019ve called so far has wanted to at least understand what is going on,\u201d he said. \u201cThis is a notable project worldwide.\u201d<\/p>\n

\tWhoever buys it will need the money to finish building it, Jones said, because contrary to years of speculation that the tower would eventually get scrapped, the only way a revival will work is if it builds on what\u2019s already there.<\/p>\n

\t\u201cTo demolish it would make it unaffordable,\u201d Jones said. \u201cYou can use the existing infrastructure. It would be odd to tear it down. There have been other opportunities to do that. Someone could have bought the Tropicana for $360 million and torn it down. It doesn\u2019t strike me that there are that many people willing to spend $3 billion to do a ground-up destination resort.\u201d<\/p>\n

\tUp to two years to finish the tower<\/p>\n

\tIt will cost about $1.2 billion to finish Fontainebleau, Knott estimated. Combined with a purchase price of $650 million, it would take less than $2 billion for a buyer to enter or expand on the Strip market. That\u2019s about $500,000 per room, he said \u2014 just half of the $1 million or more per room to build new.<\/p>\n

\tIt will be a while until completion, no matter who buys it.<\/p>\n

\tKnott said it could take up to two years to finish the tower.<\/p>\n

\tAny buyer should be in no rush, Jones said. Resorts World\u2019s 3,000-room first phase is scheduled to open in mid-2018. There\u2019s no projected completion date for the 1,100 room Alon, on the New Frontier site.<\/p>\n

\tBut \u201cthere\u2019s no benefit to them all opening simultaneously,\u201d Jones said. \u201cOf the three, (Fontainebleau) will be the largest. I would want the Strip to develop, if I were them. If you flip a switch and open today, there\u2019s a lot of empty space between the Wynn and where (Fontainebleau) is. I\u2019d want the Strip to develop such that it comes closer to me before I open.\u201d<\/p>\n

\tThe tower\u2019s plans may also need updating, Jones said. Some of its elements \u2014 a 155,000-square-foot casino and 993 condominiums \u2014 don\u2019t fit today\u2019s smaller-scale resort ethos. Newer properties such as The Cosmopolitan of Las Vegas have casino floors of about 100,000 square feet, and for-sale condos have yielded the market to timeshares. Also, with food-and-beverage and retail spending continuing to supplant gambling revenue, boosting the 300,000-square-foot retail center might be a good move, he said.<\/p>\n

\tInitial plans also called for 543,000 square feet of meeting space and a 3,200-seat theater.<\/p>\n

\tWhen construction does resume, Fontainebleau will create thousands of jobs, Parks said.<\/p>\n

\tThe project had 3,000 construction workers on-site just before it shut down in 2009.<\/p>\n

\tOnce it\u2019s open, it will have have thousands of permanent employees as well. Numbers from local research firm Applied Analysis show 1.1 hotel-casino employees per room, which would put Fontainebleau\u2019s projected worker count at just under 4,300.<\/p>\n

\n

Replies:<\/h3>\n

No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"

Fontainebleau, a shuttered project at the north end of the Las Vegas Strip. ennifer Robison, Las Vegas Review-Journal \u00b7 November 11, 2015 at 6:40 pm 1 Available on Las Vegas\u2019 hot real estate market: One hotel tower, never occupied, just…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-9220","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/9220","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=9220"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/9220\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=9220"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=9220"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=9220"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}