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Old 08-31-2017, 06:24 PM   #1
pig4bill
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Fontainebleau sold

$600 million sounds like a lot considering how much work needs doing, but I know nothing bout the casino bidness. Apparently Icahn does - stay out of the casino bidness. He made $457 million without ever opening a casino.

https://vitalvegas.com/fontainebleu-las-vegas-sold/

ROFL, one of my favorite pics:

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Old 08-31-2017, 06:35 PM   #2
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Re: Fontainebleau sold

Looks good but fail the 'location, location, location' mantra.
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Old 08-31-2017, 07:13 PM   #3
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Re: Fontainebleau sold

This always reminds me of that giant unfinished North Korean hotel.
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Old 08-31-2017, 07:44 PM   #4
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Re: Fontainebleau sold

How much is it going to cost to finish it? I remember back in 2009 when they shut construction down, they said less than a billion but I would assume that number is closer to $1.5 billion now?
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Old 08-31-2017, 09:31 PM   #5
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Re: Fontainebleau sold

oh, good, now the 8 people staying at SLS will have something to walk to
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Old 09-01-2017, 12:31 AM   #6
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Re: Fontainebleau sold

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Originally Posted by robrich View Post
Looks good but fail the 'location, location, location' mantra.
North Strip should fill in in the next decade or 2. I spy a crane and some work going on at the Resorts World site.

Also saw some kind of prep work going on at the adjacent lot to the north of the project formerly know as Fontainebleau.
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Old 09-01-2017, 01:24 AM   #7
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Re: Fontainebleau sold

As the article points out the new Convention Center (former Riv) construction is nearby. And ironically, 3 or 4 years from now the north area will have the newest casinos on the Strip. Encore, Resorts World, and Fontainebleu. If you have a spare half bill or so gathering dust it's probably a good idea to snatch up some property. The old Frontier site, maybe even Circus Circus. It probably wouldn't take much to pry it out of MGM's hands. There are also a couple of ugly-ass strip malls in the area that could use a good bulldozing.
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Old 09-01-2017, 11:22 AM   #8
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Re: Fontainebleau sold

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And ironically, 3 or 4 years from now the north area will have the newest casinos on the Strip. Encore, Resorts World, and Fontainebleu.
Aria and Cosmopolitan are newer than Encore.

But considering Resorts Worlds price tag that will probably end up way over 8 billion when they finally open in 2021 or even later, spending 2-3 billion on Fountainbleau doesn't sound too bad. That would place construction cost on a per room base at 500-750k, compared to 1.3 billion at Cosmopolitan. Resorts World will be in the same ballpark as Cosmo, maybe even higher than that.
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Old 09-01-2017, 12:22 PM   #9
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Re: Fontainebleau sold

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Originally Posted by pure_aggression View Post

Also saw some kind of prep work going on at the adjacent lot to the north of the project formerly know as Fontainebleau.
That is the mixed use basketball center:

https://www.reviewjournal.com/local/...comes-to-life/
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Old 09-01-2017, 03:37 PM   #10
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Re: Fontainebleau sold

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That would place construction cost on a per room base at 500-750k, compared to 1.3 billion at Cosmopolitan. Resorts World will be in the same ballpark as Cosmo, maybe even higher than that.
This is nitty but you have to control for occupancy rates if you compare on a per room cost basis. Fontainbleu won't have as many 100% occupancy days (where prices get jacked up).
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Old 09-01-2017, 04:08 PM   #11
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Re: Fontainebleau sold

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This is nitty but you have to control for occupancy rates if you compare on a per room cost basis. Fontainbleu won't have as many 100% occupancy days (where prices get jacked up).
i guess it really depends how north strip unfolds as a whole with its capacity for events etc
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Old 09-01-2017, 04:26 PM   #12
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Re: Fontainebleau sold

This, like SLS, is going to be a bust. Also, that Fountainebleu building is ugly as ****.
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Old 09-01-2017, 04:29 PM   #13
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Re: Fontainebleau sold

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This is nitty but you have to control for occupancy rates if you compare on a per room cost basis. Fontainbleu won't have as many 100% occupancy days (where prices get jacked up).
Occupancy is a different factor, that is also highly correlated with room rates.

To see how much money a casino makes on a room, the also have to adjust for money spent in the casino, for entertainment and retail on the premises and several other factors.

Nevertheless, construction cost per room or square foot is a pretty interesting metric. That said, for Fontainebleau that number will obv. only include the $600mil sale price and not the ~$2.5bln that was spent to construct the building and maintain it over the last 8 years.

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This, like SLS, is going to be a bust. Also, that Fountainebleu building is ugly as ****.
Very possible, but I guess there's a reason why guys like Adelson didn't want the convention center expansion towards that part of the Strip.
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Old 09-01-2017, 04:39 PM   #14
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Re: Fontainebleau sold

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Occupancy is a different factor, that is also highly correlated with room rates.

To see how much money a casino makes on a room, the also have to adjust for money spent in the casino, for entertainment and retail on the premises and several other factors.

Nevertheless, construction cost per room or square foot is a pretty interesting metric. That said, for Fontainebleau that number will obv. only include the $600mil sale price and not the ~$2.5bln that was spent to construct the building and maintain it over the last 8 years.


Very possible, but I guess there's a reason why guys like Adelson didn't want the convention center expansion towards that part of the Strip.

I would suppose the Adelson objection was strictly about competition for his own convention space. I know Steve Wynn, for example, has wanted north strip to get built out for years since it keeps his properties from being an island. Assume that Adelson is also smart enough to know that hotel competition is good for him, even if it isn't as much of an issue as it is for Wynn due to geography.

This just smells wrong though. Statements from the buyers makes them sound like they're the next company with no gaming experience to come to town and get fleeced, and it's not like that hasn't happened a thousand times already.
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Old 09-01-2017, 05:17 PM   #15
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Re: Fontainebleau sold

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I would suppose the Adelson objection was strictly about competition for his own convention space. I know Steve Wynn, for example, has wanted north strip to get built out for years since it keeps his properties from being an island. Assume that Adelson is also smart enough to know that hotel competition is good for him, even if it isn't as much of an issue as it is for Wynn due to geography.

This just smells wrong though. Statements from the buyers makes them sound like they're the next company with no gaming experience to come to town and get fleeced, and it's not like that hasn't happened a thousand times already.
His new shopping mall is gonna be DOA without another property in the area to boost foot traffic.

Alon has gone tits up but there has been movement at Resorts World. So who knows.
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Old 09-01-2017, 06:57 PM   #16
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Re: Fontainebleau sold

As long as these places get built out the North strip will get a lot busier in a few years. If there are failures it will take a couple more years, as competent investors snatch up failed properties at a discount. People realize what a license to steal Strip casinos are, and that MGM/CET would be shoveling in the money if they didn't have so much crappy debt. There is no other place for growth. Going south doesn't make sense.
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Old 09-02-2017, 02:21 PM   #17
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Re: Fontainebleau sold

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Originally Posted by pig4bill View Post
$600 million sounds like a lot considering how much work needs doing, but I know nothing bout the casino bidness. Apparently Icahn does - stay out of the casino bidness. He made $457 million without ever opening a casino.

https://vitalvegas.com/fontainebleu-las-vegas-sold/

ROFL, one of my favorite pics:

Icahn has been in the casino industry for years and still is .... His companies have bought and sold casino properties before and likely will continue to do so. Sometimes, he operates, sometimes he just buys distressed assets and resells them when it strikes himas a good time/price for a deal.

This one was a clear winner for him, although I've seen only the reported price for the property. fwiw, I was reminded that he also sold off the never-used furniture/furnishings a while back.
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Old 09-02-2017, 04:22 PM   #18
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Re: Fontainebleau sold

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fwiw, I was reminded that he also sold off the never-used furniture/furnishings a while back.
I remember in 2011 there were billboards (from the Plaza IIRC?) all over town thanking Fountainbleau for their new furniture.
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Old 09-04-2017, 03:41 PM   #19
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Re: Fontainebleau sold

Interesting, I thought I read somewhere that it had deteriorated past the point of rescue and that it was basically a tear down.
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Old 09-20-2017, 02:01 AM   #20
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Re: Fontainebleau sold

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Interesting, I thought I read somewhere that it had deteriorated past the point of rescue and that it was basically a tear down.


Me too. I thought I read that it was a scrap project and that the structure wouldn't be redeemable. Guess not?
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Old 09-20-2017, 02:56 AM   #21
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Re: Fontainebleau sold

Even bare steel would last quite awhile in that climate. Unlikely that either Icahn or this new buyer would take any chances on buying it without intense inspection.
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Old 09-20-2017, 11:16 AM   #22
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Re: Fontainebleau sold

I think they spent a good chunk of money over the last couple of years to maintain the structure.
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Old 09-20-2017, 12:36 PM   #23
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Re: Fontainebleau sold

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Originally Posted by pig4bill View Post
The old Frontier site, maybe even Circus Circus. It probably wouldn't take much to pry it out of MGM's hands. .
I thought I read something that the Circus Circus as strange it sounds is the profitable casino out of the whole portfolio. It might be that the place is fully depreciated so maybe not a fair comparison. I remember going to the steakhouse the Friday after Thanksgiving it was the busiest casino I've ever been in.
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Old 09-20-2017, 05:22 PM   #24
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Re: Fontainebleau sold

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I thought I read something that the Circus Circus as strange it sounds is the profitable casino out of the whole portfolio. It might be that the place is fully depreciated so maybe not a fair comparison.
Unlikely. They bought Mandalay Group in 2004ish and they already had all the MGM casinos and Bellagio. They're probably all on the same depreciation schedule.I don't know if you can even accelerate any more.
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Old 09-20-2017, 06:05 PM   #25
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Re: Fontainebleau sold

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I thought I read something that the Circus Circus as strange it sounds is the profitable casino out of the whole portfolio. It might be that the place is fully depreciated so maybe not a fair comparison. I remember going to the steakhouse the Friday after Thanksgiving it was the busiest casino I've ever been in.
It's dead last in the MGM Las Vegas market. Circus Circus EBITDA in 2016 was $61,989,000. The only other Las Vegas property that didn't break $100m in 2016 was Monte Carlo but it still beat CC by $17m. The only property in the entire company that did worse was Gold Strike in Tunica.

To compare, here were the top three MGM properties in terms of 2016 EBITDA:

Bellagio: $479m
MGM Grand: $330m
Mandalay Bay: $235m

The depreciation write-off on these properties was around $20m each in 2016. Circus Circus was $4.8m. All of the other MGMs in Las Vegas were in the $4-$10m range. Excalibur was the only one with a lower D/A than Circus Circus and it nearly doubled CC in EBITDA.
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