The encyclopedia · Finance & Accounting · Financial decision · 2007–2009
Fontainebleau Vegas was 70% built when the money stopped — it waited a decade
Jeff Soffer's $2.9B Fontainebleau Las Vegas filed bankruptcy on 9 June 2009, 70% complete; the unfinished tower stood for years before finally opening.
Fontainebleau Las Vegas · Turnberry Associates · 2009-06
What happened
In the mid-2000s Las Vegas high-rise boom, Florida developer Jeff Soffer's Turnberry Associates began building the Fontainebleau Las Vegas: a $2.9 billion resort of roughly 3,700 rooms on the Strip, scheduled to open in autumn 2009. By early 2009 the tower was about 70 percent complete.
The financing broke first. In April 2009 the developers sued their banks, alleging they had wrongfully walked away from financing commitments; the banks cited alleged defaults. Without fresh money the resort could not be finished, and on 9 June 2009 — months before its scheduled opening, in the middle of the financial crisis — the project filed for bankruptcy, a victim of cost overruns, a depressed condominium market and skittish lenders.
The tower became the Strip's monument to the crash: sold to Carl Icahn in 2010 for about $150 million — roughly five cents on the dollar of the original budget — it stood unfinished for years, 68 storeys of bad timing.
Why it happened
- Conceived in the easy-money condo boom, it was built on the assumption that financing would keep rolling.
- When the banks withdrew in April 2009 there was no cushion: a 70%-complete tower is the most expensive kind of unfinished building.
- The condominium sales that were meant to fund the project had already collapsed.
The lesson
Fontainebleau shows what rollover financing buys at the top of a boom: a $2.9B resort, 70% built, one credit freeze from bankruptcy, sold for five cents on the dollar.
Aftermath
The tower changed hands again for $600 million in 2017; Soffer bought it back in 2021, and it finally opened as the Fontainebleau Las Vegas in December 2023.
Sources
- Las Vegas Review-Journal, June 2019 — 10 years since Fontainebleau in Las Vegas went bankrupt (bankruptcy filed 9 June 2009; $2.9B original budget; ~70% complete at filing; developers sued banks April 2009 alleging wrongful withdrawal from financing, banks cited alleged defaults; conceived in the mid-2000s easy-money condo boom; sold to Carl Icahn in 2010 for ~$150M with virtually no changes; sold again in 2017 for $600M to Witkoff Group; renamed The Drew Las Vegas, planned 3,780-room opening in 2022; developer Jeff Soffer of Turnberry Associates)
- The Independent / AP — Long-unfinished blue Strip tower sets date for grand opening (construction halted in the Great Recession, originally scheduled to open October 2009; suspended again March 2020 by the pandemic; reacquired by original developer Jeffrey Soffer in 2021; grand opening December 2023; 3,700 rooms)
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