We have seen hotels sink into severe credit crunches before but I don’t remember one happening before the hotel was even completely built.
The Cosmopolitan, a nearly $4 billion hotel and casino under construction on a narrow chunk of land just south of Bellagio (next to the CityCenter monster) has been served with foreclosure papers. This comes just a couple of weeks after word that a deal had been worked out with some potential new investors for the project that would’ve staved off just such a move.
The foreclosure should have very little actual effect on the construction since a deal had already been worked out with the builders to keep the cranes swinging, but it is the construction itself that seems to have caused the money crunch. The original budget for the hotel was in the $2 billion neighborhood but soaring building costs have nearly doubled that figure.
The foreclosure proceeding is mostly viewed as a bigger deal to the primary original investors than to you and me and new money people will most likely be in place soon to ensure the project’s completion by 2009.
From the Vegas4Visitors Weekly Update of April 2, 2007:
Cosmopolitan Update
Construction is underway on this 3,000 room hotel and condominium resort going up just south of Bellagio. When complete it will feature a casino, entertainment and shopping areas, restaurants, and more with the rooms being managed by the Hyatt hotel chain, although it won’t be branded as a Hyatt. Completion was expected in 2008 but that will most likely be 2009 now.
From the Vegas4Visitors Weekly Update of October 31, 2005:
Cosmopolitan Unveiled
A groundbreaking of sorts was held for the new Cosmopolitan resort complex on The Strip recently that unveiled new details about the project. I say “of sorts” because rain forced the cancellation of the actual ceremonial shovel turning, but the company in charge of the project held a ceremonial unveiling anyway.
Cosmopolitan is a $1.8 billion hotel, condominium, and casino complex planned for approximately eight acres of land just south of Bellagio, effectively surrounding the Jockey Club time-share complex. It will feature two towers of around 60 stories each with a total of 3,000 units, 2,000 of which will be condominiums plus 1,000 hotel rooms managed under the Hyatt banner. The roofs of each tower will feature pools with, presumably, some of the best views in all of Las Vegas.
The owners of the condos will be able to place their units into a rental pool so average Joe’s like you and me can stay there when the mortgage payers aren’t in residence. Even before the earth was turned (or not, as the case may be) the developers have already sold 1,300 units valued at over $100 million.
The two towers will be linked by a common building that will contain a 75,000-square-foot casino and more than 300,000-square-feet of restaurant, entertainment, and retail space. The façade of that building will be all glass so pedestrians and drivers on The Strip will be able to see inside.
The Cosmopolitan is scheduled to open in 2008, about a year or so ahead of the massive Project CityCenter complex of hotels and condos being built next door on the former Boardwalk site.
From the Vegas4Visitors Weekly Update of April 11, 2005:
Hyatt Comes to The Strip
In 2008 hotel giant Hyatt will have its name on a building on The Las Vegas Strip for the first time. Hyatt has agreed to run the hotel-condo portion of the Cosmopolitan, a $1.5 billion complex being built just south of Bellagio surrounding the existing Jockey Club time shares. The Grand Hyatt at the Cosmopolitan, as it will be known, will feature more than 2,700 units, 1,000 or so traditional hotel rooms and the rest hotel-condo combos wherein the owner can either live in the unit or put it in a rental pool when not in residence.
Although not a typical mega-resort, the Cosmopolitan will certainly resemble one. In addition to the rooms, it is expected to feature a 70,000-square-foot casino, restaurants, a 300,000-square-foot retail development, and an 1,800 seat showroom, all connected to but run independently of the Hyatt. Ground breaking is expected this summer with completion in about three years.
For the record, the Cosmopolitan is completely separate from the proposed $4 billion Project City Center from MGM Mirage, which is expected to be built right next door on the land currently occupied in part by the Boardwalk Hotel.
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