If a building could have feelings and emotions, the Fountainbleau project in Las Vegas would be severely depressed. Fountainbleau Las Vegas lenders recently sued hundreds of contractors as lien disputes escalate over unpaid bills at the now bankrupt 3,815-room casino resort project.
There are 342 contractors and other mechanics lien holders, claiming to be owed a whopping $467 million for work at the stalled Las Vegas Strip development, that have been pressing for the right to take over the project for what they are owed.
Lenders, in response, charge that the liens filed by Fountainbleau subcontractors are inferior.
Meanwhile, iconic financier Carl Icahn is reportedly moving forward with his plans to buy the project during an auction this month, offering $156.2 million.
With a growing list of partially finished resort projects dotting the Las Vegas skyline, the shelving of the $4.8 Billion Echelon project joined the ranks of the Strip boneyard late last week.
The Boyd Gaming project, on the site of the formed Stardust, which was imploded in August 2008, plans to remain dormant for three to five years. It’s across the street from the bankrupt and shuttered Fountainbleau, who is still courting suitors, Echelon is located on 87 acres of what was prime real estate. Only an unusuable parkeing garage, unfinished power plant and bare steel-and-concrete remain.
In the meantime, Boyd will spend an estimated $15 million a year to secure and maintain the property that was once destined to be five hotel tower site with 5,000 rooms.
At least one unidentified potential buyer is negotiating to take over the bankrupt Fontainebleau hotel-casino development in Las Vegas.
But significant hurdles still remain for the resort to be sold and its construction completed, including difficulties a buyer may have in obtaining financing.
Stung by substantial losses on Las Vegas casino and real estate deals, banks and investors have been wary about investing in Las Vegas during the recession — especially with a growing over-supply of hotel rooms on and around the Las Vegas Strip.
Fontainebleau also indicated it’s less likely it will succeed with efforts to force Bank of America and other big banks to continue financing the $2.9 billion resort on Las Vegas Boulevard.
Fontainebleau, however, cautioned the sale of the project would be a complex transaction complicated by its inability to include the resort’s separately-financed retail component in the bankruptcy and “the difficulty that any purchaser will face in the current credit environment obtaining financing to complete the project.”
Besides these factors, any sale would be subjected to scrutiny by bank and investment company lenders, bondholders and contractors — groups each owed hundreds of millions of dollars.
While the potential buyer for Fontainebleau has not been identified, the companies most mentioned as being interested in the deal are Penn National Gaming, which has been looking for an opportunity to expand to Las Vegas; and deep-pocketed Apollo Management L.P. — one of the companies that controls Harrah’s Entertainment Inc.
Ending weeks of speculation, the Fountainbleau project in Las Vegas and two of its affiliates filed for Chapter 11 bankruptcy protection in Florida on Tuesday.
The $3.1 billion mixed-use project that’s 70 percent complete, owned by Miami-based Fountainbleau Resorts, listed more than $1 billion in assets against more then $1 billion in estimated liabilities.
The filing noted that the developer has between 1,000 and 5,000 creditors.
Fountainbleau Las Vegas was designed as a 3,815 room hotel-condo-casino project with a large retail center, restaurants, spa and other amenities.
If you missed the recent new casino opening hoopla, Steve Wynn has opened yet another of his gems- Encore Las Vegas – on December 22, 2008. Weighing in with a price tag of $2.3 billion, the glitzy 2,034-room Strip playground provides refreshing eye-candy from all the gloomy economic news on work stoppages for the partially started and planned Las Vegas casino and entertainment projects.
With any luck, perhaps Encore will serve as the cornerstone catalyst for a rejuvenated Las Vegas and a positive economic outlook in 2009.
Encore’s opening, combined with the good news of Phil Ruffin’s $775 million purchase of Treasure Island Casino & Hotel from MGM Mirage earlier this month – a great holiday present for their 3,200 Treasure Island employees. The former New Frontier owner’s purchase will help fund the planned finish of MGM Mirage’s $9.1 billion CityCenter next year, the largest private construction job in the U.S..
And, lest we forget, the Fountainebleau and the M Resort still are on track to debut in 2009, further helping to hopefully solidify our lethargic economy.
Recent local Las Vegas casino stimulus events could not have happened at a more needed time. Gaming revenue in Clark County, which includes downtown Las Vegas and the Strip, is reported down 8.5% for the 2008, to $8.3 billion. And visitor volume is down 3% over last year, though the city’s convention business is holding steady.
Any positive local stimulus would be welcomed with open arms.