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The Future of Fontainebleau Las Vegas

Posted on January 19, 2010 by Jordan There have been 0 comments

Fontainebleau is believed to be the most expensive, unfinished building in the nation. That’s uncharted territory for many buyers, but there are some who look at this as a great investment. The development itself is a $2.9 billion 68-story 3,889-room hotel and casino on the Las Vegas Strip. A nice piece of this property is the luxury condo development, which will include a 95,000 sq ft casino, a 60,000 sq ft spa, 3,300-seat performing arts theater, 1,018 condo-hotel units, 180,000-square-feet of retail space, 400,000 sq ft of indoor and outdoor conference space, nightclubs, and 24 restaurants and lounges.

Billionaire investor Carl Icahn is the front-runner to take over the Fontainebleau Las Vegas resort. Anyone else interested will have to offer more than the $156.2 million currently offered by the "stalking horse bidder" Carl Icahn who is the former owner of the Stratosphere and the Arizona Charlie's. Icahn also controls Las Vegas-based gaming company Tropicana Entertainment LLC, hasn't disclosed plans for Fontainebleau should he acquire it. Carl Icahn is no stranger to the Las Vegas gaming market, last year one of his companies booked a $700 million profit by selling American Casino and Entertainment Properties LLC to a Goldman Sachs real estate fund for $1.2 billion.

Others interested in the bidding is San Francisco real estate developer Luke Brugnara, who was denied a gaming license by Nevada casino regulators in 2001, said he would pay up to $200 million for the bankrupt Fontainebleau project. Brugnara, who owns land on the Strip and throughout Las Vegas, said he submitted a $170 million bid with the U.S. Bankruptcy Court in Miami for the shuttered Fontainebleau. Brugnara said he is backed financially by a New York City hedge fund. If a qualified bid exceeds Icahn's offer, a bankruptcy judge has set a Jan. 27 hearing to consider the sale of the resort to the highest bidder.

The $1.5 billion estimated cost to finish the job is something that Penn National Gaming, a company that pulled out of the running early in the bidding process, came up with. Penn did months of homework investigating the project and crunching numbers on what it would take to generate a profit on the resort. Whoever wins the bidding war will probably spend less than that to complete the building because subcontractors might agree to finish the building at lower rates given that some money is better than none. On the other hand another option could be not to finish the building and simply sit on the purchase, biding time until the economy improves.

This post was posted in Vegas News