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| Fontainebleau: Preview Information | ||||||||||||||||||||||||||||||||||
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If you need evidence of how hard Las Vegas was hit by the recession, you only need to look at the north end of the Strip at the big hulking pile of steel and glass that is (or was to be) the Fontainebleau.
The Fontainebleau was intended to be a modern Las Vegas interpretation of the famed Miami hotel with nearly 4,000 rooms, a 100,000 square-foot casino, restaurants, showrooms, shopping, and more. The mostly finished room tower soars above neighboring Riviera and Sahara but it is nothing but a shell. Things started going wrong in 2008 and 2009 when several banks pulled financing for the project after, they allege, the developers missed some important debt payments. The developers say they didn't miss a payment and accused the banks of collaborating to shut down the project due to conflict of interest (one of the banks was dealing with the Cosmopolitan hotel down the street that was also bankrupt) via a $3 billion lawsuit. Without money to pay people, the bulk of nearly 3,000 construction workers were laid off as were most of the staff in the corporate offices. The whole thing wound up in a bankruptcy auction in 2010 but that got cancelled when they only received one bid from billionaire Carl Icahn, former owner of The Stratosphere. It was an unbelievable bargain because he snapped up the property for $156 million, a fraction of the estimated $2 billion that has already been spent building the place. In better times, $156 million might have covered the cost of the land nevermind the big building on top of it. Of course that is just the beginning of the checks that Icahn may need to write. It is believed that it will require another $1 billion (at least) to finish the hotel. But will he finish it? Icahn says he will take his time to decide the best plan for moving forward on the Fontainebleau and, with his casino experience (he also owns several Tropicana branded properties around the country but not the Las Vegas one), he could very well decide he wants a Strip addition to his portfolio. However most analysts believe Icahn will probably hold onto the property for a few years until the economy improves and then sell it to the highest bidder for a profit and make it someone else's problem. Perhaps very telling about his strategy is that he sold off all of the furnishings that were to go into the building. Whatever the future of the Fontainebleau (and if it will even be called that), it will be years before you are ever able to walk inside. If it opens before 2015 I'll be surprised.
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