Icahn lands Las Veg bargain; what next?

Billionaire investor Carl Icahn’s path to owning one of his best Las Vegas bargains to date was cleared Wednesday when he was named the winner of the auction for the bankrupt Fontainebleau Las Vegas.

But how long the stalled 3,889-room hotel-casino will sit unfinished on the corner of Las Vegas and Riviera boulevards is now the big question.

"There’s no reason to build anything on the Strip for a long time," Bill Robinson, an economics professor at the University of Nevada, Las Vegas, said. "There’s extra capacity there already."

Nearly 7,800 new rooms opened in Las Vegas during the fourth quarter between CityCenter, Planet Hollywood Resort, Hard Rock Hotel and the Golden Nugget. Additionally, Caesars Palace has the 660-room Octavius Tower that sits unfinished.

The U.S. Bankruptcy Court in Miami accepted Icahn’s $150 million bid after the examiner disqualified two competing bids that didn’t meet criteria.

Icahn’s bid includes $105 million in cash.

The price is small compared to the nearly $2 billion already put in by the former developer, Miami-based Fontainebleau Resorts.

The $150 million price tag makes the value of the 24-acre site without the unfinished building $6.25 million an acre.

The sale is expected to close on Feb. 9. No creditors objected to the sale, although some contractors and lenders are pursuing lawsuits against the original developer.

Robinson said Icahn’s purchase of the Fontainebleau is typical of the billionaire’s method.

"This is what he’s always done," Robinson said. "Bought things he thought were undervalued, mismanaged or in some other way is going to be a bargain that he can hang onto a while and make some coin off of."

He sold American Casino & Entertainment Properties, which owned the Stratosphere and both Arizona Charlie’s, in February 2008 for $1.3 billion. Icahn had acquired those properties in bankruptcy or at depressed values.

Icahn told the Review-Journal last week that he would wait for the Las Vegas gaming market to settle before deciding how to proceed with the Fontainebleau.

A representative of 17 labor unions that saw 3,000 of its members laid off in late April when the project was shut down described Icahn’s takeover of the project as promising.

"From a building trades perspective, this is the step in the right direction instead of sitting there in bankruptcy," Southern Nevada Building and Construction Trades Secretary-Treasurer Steve Ross said Wednesday morning. "We’re being optimistic and positive about it because now somebody actually’s got it. Somebody with a proven track and he’s been successful with properties before. Hopefully, by the second quarter this year maybe we’ll have some activity going on."

The Fontainebleau filed for Chapter 11 bankruptcy June 9 after lenders stopped $800 million in funding.

The project was about 70 percent complete when construction was halted, according to Fontainebleau Resorts.

The Fontainebleau once had a construction budget of almost $3 billion. Analysts project it will take at least a $1 billion to finish the project, which was designed as a hotel-condo-casino with a large retail center, restaurants, spa and other amenities.

Although the unions have not had any direct discussions with contractors or Icahn about restarting the project, Ross said Icahn could choose to complete some components of the project, such as the casino and some hotel rooms, but delay finishing others such as the 300,000-square-foot retail center.

"Because of the size of the project, there’s a lot of tenant spaces," Ross said. "You want to fill those tenant spaces with store owners as well, but are they financially viable to go in there? There’s a lot of variables out there."

Ross estimated it would take a year to finish construction if Icahn decides to complete everything.

Robinson said there is no reason to restart the project in the near future with all the rooms recently introduced to the market.

Fontainebleau attorney Scott Baena told the court that Icahn being the only qualified bidder is a comment on the state of the economy.

"The sales process dramatically demonstrated that this project continues to engender risks and costs that made it unattractive to strategic and financial buyers," Baena said.

Robinson said Icahn’s interest in the Fontainebleau after his decision to sell the Stratosphere can be seen as a sign that investors still see value in Las Vegas.

"His interest is a good independent indicator that he doesn’t think the future is horrible here," Robinson said. "He has some idea what the place is like and what the market’s like. The fact that he sees it as undervalued is something positive."

Fontainebleau is not the only distressed gaming asset Icahn has moved on.

Nevada gambling regulators last week approved his plan to control nine casinos, including two in Laughlin and one in Lake Tahoe, as part of the bankruptcy reorganization of Las Vegas-based Tropicana Entertainment. The Tropicana on the Strip is owned separately.

In December he revealed in federal court papers in New Jersey that he planned to pump more cash into his bid to buy Donald Trump’s bankrupt casinos. Icahn already had agreed to buy a majority of the $486 million bank debt on three properties: Trump Plaza Hotel and Casino, Trump Taj Mahal Casino Resort and Trump Marina Hotel Casino.

Icahn Partners Inc. also committed an additional $125 million to his bid for the struggling Trump Entertainment Resorts Inc., according to court papers.

Contact reporter Arnold M. Knightly at aknightly @reviewjournal.com or 702-477-3893. The Associated Press contributed to this report.

ad-high_impact_4
Business
Bellagio, MGM Resorts International’s luxury hotel turns 20 – Tara Mack
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like