Cosmo Resort-Casino’s Financing in Jeopardy
- Jan 17, 2008
Deutsche Bank has issued a notice of loan default to 3700 Associates, developer of the Cosmopolitan Resort & Casino in Las Vegas, according to a press release from Perini Corp., the project’s general contractor. 3700 Associates is reportedly wholly owned by Ian Bruce Eichner. In a prepared statement, Eichner said, “This action by our lender comes as no surprise to the senior management of The Cosmopolitan. With the current challenges within the real estate and debt capital markets ? we both anticipated and planned for this.”A Deutsche Bank spokesperson was unable to provide further information, saying the bank does not comment on client matters. The Associated Press has reported that the loan in default is a $760 million construction loan.The 8.5-acre complex on the Las Vegas Strip is to include twin 52-story towers encompassing nearly 3,000 hotel rooms, hotel suites and condo units, along with an 80,000-square-foot casino, 265,00 square feet of restaurants and retail, 150,000 square feet of convention and conference space to be managed by Grand Hyatt, a five-acre playground with beach, and three wedding chapels.Ground was broken in October 2005, and completion was originally scheduled for late 2009. The published cost of the project is $3 billion.The Las Vegas Sun reported last week that the Cosmopolitan’s developer was in discussions with Merrill Lynch to raise an additional $400 million in financing for the project. The paper also reported that the previous week, 3700 Associates’ COO, Audrey Oswell, had departed for a position with Fountainbleau Resorts.The Cosmopolitan’s difficulties are “certainly not emblematic of a larger problem on the Las Vegas Strip,” Jeremy Aguero, principal analyst with Applied Analysis, Las Vegas, told CPN. Rather, he said, the project’s travails are more indicative of problems in the high-end condo market, specifically ?lack of demand at ultra-high price points.Though Aguero can’t speculate about what might happen with the project, which he estimated has steel and floors up to about the 16th floor, he emphasized that the site’s location on the Strip is a good one, between the huge MGM/Mirage City Center project and the Bellagio.