New York developer Related Companies, Starwood Hotels and Resort Worldwide Inc.’s W Hotel group and an unidentified casino operator have teamed up to make a bid on the $3.9 billion Cosmopolitan Resort Casino in Las Vegas, which is unfinished and looks to be in trouble financially.
The Wall Street Journal reported that news of the bid was according to people familiar with the matter.
The Cosmopolitan site is located next to the Bellagio casino and set to have 3,000 hotel rooms, most with condominium-style ownership. To explain the project’s problems, developer and owner Ian Bruce Eichner has pointed his finger at the credit-market meltdown and a jump in construction costs since building began in 2005. Even so, he says buyer interest in the hotel-condo rooms has been strong.
This month, the hotel-condominium and casino project’s lender, Deutsche Bank AG, started foreclosure proceedings against Eichner on a $760 million loan.
In January, Eichner said that his company, 3700 Associates LLC, was working with Deutsche Bank and Merrill Lynch to find new investors. As of January 16th the $760 loan from Deutsche Bank was declared to be in default.
Eichner is in default on another loan, one for $175 million from private hotel firm Global Hyatt Corp. and New York hedge fund Marathon Capital – and an investor group led by Hyatt and Marathon also want the Cosmopolitan, according to the Wall Street Journal.
The group had tried to persuade Deutsche Bank to let them take over the hotel-casino but when an agreement couldn’t be reached, Deutsche Bank went ahead with foreclosure.
Starwood tried to open a W hotel in Vegas along with developer Edge Group as part of a 3,000-room, $2.5 billion condo-hotel and casino project but Starwood pulled out last year and the Edge Group canceled the project because of rising construction costs. In 2006 Related canceled two condominium towers in Las Vegas and also canceled casino, hotel and condominium project Las Ramblas, which included George Clooney and nightclub owner Rande Gerber, husband of Cindy Crawford, as investors.
In other Vegas news, MGM Mirage is still working away on its $8 billion, 76-acre CityCenter, which includes nearly 5,000 hotel rooms and 2,600 residential units.
According to the Las Vegas Convention and Visitors Authority, in Sin City there’s $35 billion in new construction either planned or currently ongoing.