Two Way Hard Three | Las Vegas Casino & Design Blog

April 23, 2009

LVSUN: Fontainebleau Funding Disaster

Posted by Hunter

According to the award winning Las Vegas Sun, Fontainebleau is suing some banks that apparently don't want to loan about $800MM that was promised to complete the project.

Funny, we were just talking about FBleau on the VegasGang today. Episode to be posted soon.


Read archived comments (11 so far)
April 23, 2009 9:59 PM Posted by Craig Swan

Fontainebleau has the most disfunctional group of non-leaders. This is the reason that they probably will not open. I feel sorry for the front line employees who work for this arrogant and unprofessional team.

April 24, 2009 11:24 AM Posted by dave202

what makes you call them arrogant? Glenn Schaeffer was well liked at Circus/Mandalay. And Audrey Oswell is reportedly a strong leaders as well.

April 24, 2009 3:48 PM Posted by Hunter

This story indicates that lack of condo sales and over-budget construction problems are involved:

(thanks David)

April 24, 2009 4:34 PM Posted by scott

I found this little snippet which makes sense to me;

However, a source familiar with the situation said that the agreements were contingent upon Fontainebleau Las Vegas selling a certain number of condos at the site -- which they have not, the source said. The source also says that the builder was over budget, which also would violate the agreement.

April 24, 2009 6:33 PM Posted by oooo0

I'm curious what will happen with all these condo units, not only at Fbleau, but City Center, PHo, and wherever else. Haven't seen the stats myself, but I gotta think the sales centers are virtual ghost towns these days. Even with the low prices I wouldn't buy because the association fees will be insane with the place minimally occupied. Lower hotel rates also make a condo less desirable as well. The way things are going, hourly workers at City Center could be living at Vdara in a "luxury" condo bought for hundreds of thousands less than its initial asking price. Isn't that what they wanted all along? A city within a city?

May 12, 2009 11:08 PM Posted by mike_ch

F-bleau is now accusing Deutsche of conspiring to shut them down to help Cosmopolitan. Sounds kind of like a desperate reach to me. As anyone who follows this market knows, the success or failure of any resort has an impact on all the others.

May 13, 2009 9:46 AM Posted by scott

Agreed Mike, smacks of desperation.
Fontainebleau didnt even have any condos for sale before the last piece of funding was pulled, so how could that pulling of finance affect the competition against Cosmo?

May 13, 2009 10:23 AM Posted by parchedearth

I don't think FB can win this case, but a year delay in opening would certainly benefit Cosmo (and by extension DB). It will also help CC. Staggering these openings over several years will make sales go much smoother.

We also need to get some clarity on what the banks believe are the specific grounds for default. For example, was there a commitment to have a % of condos pre-sold? Were cost overruns a big issue?

I predict this will be tied up in the courts for a year or more and eventually FB will be at least partially owned by someone else (maybe even the banks). No happy ending on this one.

May 13, 2009 11:34 AM Posted by TC from Boston

If you buy a condo at either Cosmo or FB when you're not there can they use it for a hotel room?

I'm a lil new the the whole condo hotel relationship

May 13, 2009 2:05 PM Posted by scott

Yes, you can have them "use" your condo and sell it as a hotel room for the evening. They charge a management fee, and you get a small cut of the nightly charge, as the owner of the condo.

May 15, 2009 7:29 PM Posted by B

Fontainebleau resorts still owes my company $800k for furniture provided in their Miami Beach remodel. They still owe many other companies large amounts of money and are not honoring their contracts. I would recommend not staying at their hotels.