A developer from Fontainebleau relishing the chance to finish what he started

0

AVENTURA, Florida – After Jeffrey Soffer bought the Fontainebleau, he walked the long-unfinished Las Vegas project for the first time in over a decade.

And, he recalls, it seemed like nothing had changed.

“It was exactly the same way we left it,” he said recently.

The 60-story skyscraper, one of the tallest buildings in Las Vegas, is a product of the mid-2000s real estate frenzy, but never opened – a towering reminder of the boom days , the devastating crash that followed and, more recently, the severe economic fallout from the pandemic.

But in a looping moment, Soffer, the original developer from Fontainebleau, partnered with the real estate wing of Kansas conglomerate Koch Industries to acquire the hotel-casino project nearly a year ago.

Construction has resumed and they aim to open the more than 3,700-room Fontainebleau Las Vegas in the fourth quarter of 2023.

According to the owners, the complex was already 75 percent complete.

“The good thing is that the hard part is done because the structure is in place. … Now you are just filling in the pieces, ”said Soffer, owner of the real estate company Fontainebleau Development.

Needless to say, it’s been a long journey, involving bankruptcy proceedings, construction stoppage, different groups of homeowners, and years of not knowing what would happen with the partially constructed skyscraper towering over Las Vegas Boulevard.

“In the end, it ended up in my hands,” Soffer said, “which was crazy, but it is.”

“The top of the market”

Soffer, whose portfolio includes the iconic Fontainebleau Miami Beach hotel, said in a Dec. 7 interview with the Review-Journal at its offices in Aventura, Florida, that the partners behind the North Strip project are “very well funded.” .

He said they weren’t looking for the money, and said privately-held Koch – which Forbes magazine reported with estimated revenue of $ 115 billion in 2020 – is “likely larger than all the companies on the Strip put together “.

The developers are also aiming to make the resort a luxury destination competitor to Wynn Las Vegas.

“We are going just after the high end of the market,” said Fontainebleau Development president Brett Mufson.

He added that its location across from the newly constructed West Hall of the Las Vegas Convention Center gives the resort a “huge competitive advantage” and that the company has already answered calls from groups wishing to book conferences at the Fontainebleau.

Mufson, who also worked on the project under former owner Steve Witkoff, didn’t think a developer would try to build a Fontainebleau-sized resort from scratch in Las Vegas these days, saying: “C is just too expensive to build. “

Soffer did not disclose the estimated price to complete the Fontainebleau, but he estimated it would cost more than $ 6 billion to build the complex from scratch.

“We wouldn’t buy this place if it was just land,” Soffer said.

‘Will never open’

Soffer acquired the 1950s Fontainebleau in Miami Beach in 2005 and unveiled plans for the one on Las Vegas Boulevard that same year, teaming up with former Las Vegas casino manager Glenn Schaeffer on the project.

They inaugurated the land in 2007. But soon enough, the roaring real estate market collapsed, the economy imploded, and the Fontainebleau developers sued several banks in the spring of 2009, alleging that “unscrupulous” lenders had given up. their commitment to finance the construction of the multibillion-dollar building. dollar resort.

Without the additional funds, the project “cannot be completed and will never open,” the developers warned.

Fontainebleau of Las Vegas went bankrupt in mid-2009 – one of countless real estate projects in the valley to derail after the bubble burst – and billionaire Carl Icahn acquired it in 2010 for around $ 150 million. dollars.

After leaving it largely untouched, Icahn sold the property in 2017 for $ 600 million – four times its purchase price – to Witkoff and his partners.

The sale started another chapter for a stalled project which resulted in a new name and a planned opening but, in the end, left the project still unfinished.

Pandemic shots

In early 2018, Witkoff and Marriott International unveiled the resort’s new name, Drew Las Vegas; plans for two Marriott brands there; and an opening scheduled for the end of 2020.

Witkoff, who then postponed the debut to 2022, said in early 2020 he was close to securing a construction loan of around $ 2 billion for the project.

But in March 2020, as Las Vegas quickly closed for fear of a coronavirus outbreak, it suspended construction.

The contractors then filed tens of millions of dollars in liens alleging unpaid invoices for their work at the Drew. Several former employees also sued Witkoff, alleging they were fired from the project amid the pandemic and were not paid in accordance with their contracts.

Soffer and Koch announced their acquisition on February 11. According to Clark County records, the new owners acquired debt on the project on February 11 and, on the same day, acquired the property from Witkoff through a “deed in lieu of foreclosure.” “

Las Vegas real estate broker Michael Parks, a CBRE group hotel-casino specialist, said at the time that an act in lieu was usually done because a property is in financial difficulty and such transactions are ” more frequent in times of economic crisis “. “

He also confirmed that a deed in lieu could be registered because a homeowner is underwater, meaning their mortgage debt exceeds the value of the property.

Some borrowers, he said, “just give up and give it back to the bank.”

According to Mufson and Clark County records, the property sold for $ 350 million.

“I built everything that is there”

As recently as July, Marriott’s website reported that the resort would open in October 2023. But in October, the hotel chain confirmed that it had “recently reached an out-of-court settlement with the owner of the hotel that led Marriott to quit the project.

Soffer told the Review-Journal that he has an “excellent” relationship with Marriott – his portfolio includes a JW Marriott resort in Aventura that has two golf courses and a water park – but that his Las Vegas Strip deal was with the previous owner. .

Instead, Soffer wanted the Fontainebleau brand for the project.

“We didn’t disagree; we just sat down, worked, ”he said.

Soffer, who released the name of the property and its scheduled opening in November, said he was told more than 3,000 construction workers would be on site every day by the end of March.

All in all, he said the deal to buy the Fontainebleau made “a lot of sense” and noted that he “knew everything” about the property.

“Obviously, I know the asset very well. … I built everything that is there today, ”he said.

Contact Eli Segall at [email protected] or 702-383-0342. To follow @eli_segall on Twitter.

Share.

Comments are closed.