Saturday, September 25, 2010

More Capacity Coming to Las Vegas: Cosmopolitan of Las Vegas Opens December 15

Lest we forget, there are still more projects set to open in Las Vegas. MGM Resorts' (MGM) CityCenter property will have had a very brief period as the newest hottest property, only to be eclipsed. Cosmopolitan of Las Vegas is set to open December 15:

Then there’s the Cosmopolitan. After the project’s original owners defaulted on a Deutsche Bank loan, the bank bought the hotel and decided to finish construction and run the casino itself, via its own management team.
Another project waiting in the wings is the Fontainebleau Resort Las Vegas. This one was even more distressed than Cosmopolitan:
Fontainebleau Las Vegas LLC, filed for Chapter 11 bankruptcy protection in June of 2009.[... ] All construction work has stopped on the project, which is about 70 percent complete
Earlier this year, Carl Icahn was able to buy the partially completed Fontainebleau for $150 million:
The 3,889-room Fontainebleau filed for Chapter 11 bankruptcy June 9 after nearly $800 million in funding from the lenders was pulled.

The project cost more than $2 billion and was about 70 percent complete when construction was halted, according to its original developer, Miami-based 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 construction of the project.
Imagine if MGM had observed how many competitors were expanding or entering the market, and patiently waited until later in the business cycle to make a move. That's what I would have done.

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