Might you be looking for a piece of real estate? A fixer upper has just gone on the market, and we hear it has some potential.
The ideal buyer would have to be able to work with Las Vegas’ construction unions, and the Clark County Commission. This person would also have to have or be able to hire the marketing savvy to get people to come to the building once it’s finished.
And please, don’t let the fact that your success or failure will impact the entire north end of the Las Vegas Strip sway you. We hear there are neighbors who will welcome you with open arms.
The asking price is a mere $650 million. Such a bargain!
We are, of course, talking about the Fontainebleau resort and casino, which billionaire investor Carl Icahn put up for sale this week. The building has sat unfinished since 2009, when its original owners filed for bankruptcy. Icahn bought the property in 2010 for $150 million.
John Knott is a gaming real estate expert and executive vice president of CBRE, the real estate firm that is brokering the deal.
He said they've already started talking to potential buyers of the property and companies are interested.
"It's an opportunity for somebody to purchase the property complete the structure and be in a competitive position in comparison to competition because of its cost per room," Knott said.
According to Knott, the numbers break down like this: $650 million to buy the property. $1.2 billion to finish it, which all equals about $1.85 billion for a little over 3,800 rooms. That is about $500,000 per room. He said that amount is half or - even a little less than half - of what it would be to build a resort from the ground up.
"It is a bargain, yes!" Knott said.
Knott denied the idea that the property has been stripped. He said that some furniture, fixtures and equipment have been removed but, "for the most part the construction that was done stands intact."
Knott believes the property will be sold before the end of the first quarter and it could easily be open by 2018.
Besides the fact that the resort is nearly finished (it was 70 percent complete when it closed), it is in an area where several new projects are either underway, like Resorts World, or in the works, like the Las Vegas Convention and Visitors Authority plans for the now-closed Riviera.
"There's nearly $10 billion in construction projects that would happen in this general neighborhood," Knott pointed out.
He said all of the metrics show the Las Vegas Valley is out of the recession, including record tourist numbers, improved mass market gaming numbers, and occupancy rate, which is near record levels again.
John Knott, gaming real estate expert and executive vice president of CBRE
