Fontainebleau Resort Las Vegas
|Fontainebleau Resort Las Vegas|
|Location||Las Vegas Strip|
|Address||2755 Las Vegas Boulevard South
Las Vegas, Nevada 89109
|Town or city||Winchester, Nevada|
|Construction started||February 2007|
|Owner||Witkoff Group, New Valley LLC|
|Roof||224.03 m (735.0 ft)|
|Design and construction|
|Architecture firm||Carlos Zapata Studio
Bergman Walls Associates
|Main contractor||Turnberry West Construction|
|Number of rooms||2,871 hotel rooms & 1,018 condominiums|
|Total gaming space||95,000 sq ft (8,800 m2)|
Fontainebleau Las Vegas is an unfinished resort, condominium, and casino on the Las Vegas Strip on the 24.5-acre (9.9 ha) site previously occupied by the El Rancho Hotel and Casino and the Algiers Hotel in Winchester, Nevada. It was intended to be a sister property to the well-known 1950s-era Fontainebleau Miami Beach hotel. The building is currently the second tallest structure in the Las Vegas Valley.
Fontainebleau Las Vegas was announced in May 2005, with initial plans to begin construction by March 2006, and to have the resort opened by 2008. Construction began in February 2007, but was stopped in 2009, when the project went into bankruptcy. The project, upon completion, was expected to include: a 95,000 sq ft (8,800 m2) casino, a 60,000 sq ft (5,600 m2) spa, 3,300-seat performing arts theater, 2,871 hotel rooms, 1,018 condominium units, 180,000 sq ft (17,000 m2) of retail space, 400,000 sq ft (37,000 m2) of indoor and outdoor conference space, nightclubs, and 24 restaurants and lounges.
The building was designed by Carlos Zapata Studio with Bergman Walls Associates as the architect of record. In August 2017, the unfinished resort was sold to investment firms Witkoff Group and New Valley LLC for $600 million.
The property was initially occupied by the Thunderbird hotel and casino, opened in 1948. It was later renamed as the Silverbird, and then as the El Rancho, before closing in 1992. In May 2000, Turnberry Associates purchased the 21-acre (8.5 ha) property for $45 million and imploded the El Rancho later that year, to make room for a London-themed resort that ultimately never materialized because of an economic downturn caused by the September 11 attacks.
A privately held company known as Fontainebleau Resorts was later co-founded by Jeff Soffer, who was the chairman and majority owner of Turnberry Associates. In March 2005, Turnberry Associates paid $97 million to purchase 3.6 acres (1.5 ha) of adjacent property – south of the former El Rancho – that had previously been occupied by the Algiers Hotel, which was to be replaced by the Krystle Sands, a high-rise condominium project that was cancelled earlier that month. The purchase gave Fontainebleau Resorts and Turnberry a total of 25 acres (10 ha).
Fontainebleau Resorts and Turnberry announced the Fontainebleau Las Vegas on May 12, 2005, as a casino and 4,000-room hotel. The project would be a sister property to the Fontainebleau Miami Beach hotel, purchased by Fontainebleau Resorts earlier that year. The Fontainebleau would be built on the former property of the El Rancho and Algiers, located adjacent to the Turnberry Place condominium complex, east of the planned resort. Groundbreaking was expected to occur by March 2006, with the project planned to be opened by 2008. At the time, the company was considering the addition of condominiums to the project, but was still working on the final design plans. Glenn Schaeffer, the former president of Mandalay Resort Group, was hired to oversee the new project as the president and chief executive officer of Fontainebleau Resorts.
In August 2006, the project was approved for a 735-foot hotel tower with 2,929 hotel rooms and 959 condominiums. Also approved was a casino, meeting space, restaurants, and show rooms. In September 2006, zoning for the $1.5 billion project was delayed because of concerns from Turnberry Place residents regarding potential traffic increases that would be caused by the new resort.
Turnberry West Construction began construction of the Fontainebleau Las Vegas in February 2007. In April 2007, Publishing and Broadcasting Limited purchased 19.6 percent of Fontainebleau Resorts for $250 million. Preparation work on the property was underway that month, although an official groundbreaking ceremony was not held. At that time, the project was expected to cost $2.8 billion, and was to include a 63-story tower with 3,889 hotel and condo hotel units, as well as a 100,000 sq ft (9,300 m2) casino. In June 2007, Fontainebleau Resorts secured approximately $4 billion from various financial institutions to pay off debts and to finish its projects, including the Fontainebleau Las Vegas, which was expected to open in fall 2009. At the time, Schaeffer predicted that less than one-third of the resort's revenues would come from its casino.
The resort's parking garage was to stand seven stories, with the first two floors to be located underground. In July 2007, plans were approved to increase the garage from seven stories to 23 stories. In August 2007, a construction worker died after a 30-foot fall on the property. Several days later, a large concrete slab in the parking garage fell and caused slabs on two lower floors to collapse. No workers were injured or killed by the three large slabs.
In October 2007, residents of Turnberry Place alleged that they were deceived by Turnberry, saying they were never notified of the increased size of the Fontainebleau's parking garage. Other residents were concerned about the impact of noise and pollutants from the new project. Soffer said Turnberry did a "respectful job" of building the Fontainebleau hotel tower away from Turnberry Place residents. Soffer also stated that the property was zoned for a hotel and casino, and said that residents knew such a project would ultimately be built on the property: "We're not going to buy a 20-acre property and leave it as a vacant lot. It's a property with proper zoning and nothing was ever promised. It's as simple as that. […] The bottom line is you can't please everyone." Turnberry Place residents planned to have a district judge rule on whether the Clark County Commission should have approved the garage re-design, which was alleged to be in violation of a county ordinance. The judge ruled in favor of the project, stating that the re-design was legally approved.
In April 2008, Fontainebleau Resorts stated that the project was fully financed and that progress was continuing despite other local projects that had suffered financial problems, including Crown Las Vegas and the Cosmopolitan of Las Vegas. At the time, the project had $2.4 billion in debt. The company planned to put the Fontainebleau's 1,018 condominium units on sale in September 2008. Between $700 million and $900 million in presales was expected to come from the sales. Condominiums were to range between 540 sq ft (50 m2) to 900 sq ft (84 m2); 17 units would be built on each floor, in the center of the tower. A total of 6,000 people were expected to be employed at Fontainebleau upon its opening. The casino was to feature 1,700 slot machines and 125 table games. The tower was topped out in November 2008.
Schaeffer left Fontainebleau Resorts without comment in May 2009. Schaeffer was primarily responsible for securing more than US$3 billion in loans for the project.
Bank of America, in its capacity as agent for a syndicate of term lenders, refused to disburse additional funds for construction around this time. As a result, the resort's operator, Fontainebleau Las Vegas LLC, filed for Chapter 11 bankruptcy protection in June 2009. Litigation against Bank of America ensued, alleging that it had wrongfully withheld funds, but the case was resolved in favor of Bank of America in 2012.
In a move seen as an attempt to force creditors to supply funding, Fontainebleau's owner sued himself in the form of the general contractor suing the hotel ownership company – both controlled by the same individual, Turnberry Associates CEO Jeffrey Soffer. Construction work has stopped on the project, which is about 70 percent complete; the grand opening had been scheduled for October 2009. In July 2009, the resort sought permission in bankruptcy court to cancel events that were scheduled for the first half of 2010, as well as permission to cancel a lease for office space which was to be used for Fontainebleau's employee recruitment center.
In October 2009, Penn National Gaming was considering purchasing the partially completed resort and the 24.5 acres (9.9 ha) of land for US$300 million. At that rate the land was being sold for US$12.25 million per acre. Two years earlier land was going for over US$30 million per acre on the Strip. Over US$2 billion has already been invested in the topped-out building on the site.
Carl Icahn purchase
However, in bankruptcy court in Miami, Florida on November 23, 2009, corporate raider and financier Carl Icahn who until 2008 controlled major casino/resort operator American Casino & Entertainment Properties offered US$156 million in cash and financing, outbidding Penn National Gaming for control of the Fontainebleau. Icahn's bid includes a US$51 million debtor-in-possession loan, which, until the resort is auctioned, will provide funding to stabilize the building, cover employees' salaries, cover previous costs and eliminate the need for the resort to ask the bankruptcy court each week to borrow and spend money. Penn National dropped out of the bidding after going as high as US$145 million; they had offered US$101.5 million in cash and loans.
As of November 2009, the cost to complete the resort is an estimated US$1 to 1.5 billion.
On February 18, 2010, Carl Icahn assumed part-ownership of the project without an auction by being the only qualified bidder, paying US$150 million.
In October 2010, Icahn auctioned off the furnishings previously intended for the building. For example, the Plaza Hotel & Casino in Downtown Las Vegas bought rugs, furniture and mattresses from the sale and used them in a refurbishment that was completed in late 2011.
In November 2015, Icahn listed the hotel for sale at an asking price of $650 million. The hotel is listed through the CBRE Group. According to CBRE Group, "It will cost about $1.2 billion to finish Fontainebleau. 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's about $500,000 per room, just half of the $1 million or more per room to build new." In August 2017, investment firms Witkoff Group and New Valley LLC purchased the unfinished resort for $600 million, with plans to rename it. Additional plans were not disclosed for the project.
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