The Real Deal Miami

Witkoff and Vector bet $600M on former Fontainebleau Las Vegas site

Carl Icahn had acquired the former Turnberry Associates' property after it fell into bankruptcy in 2009 during construction
By Ina Cordle | August 29, 2017 05:50PM

Fontainebleau Las Vegas in 2011 with from left, Steve Witkoff and Howard Lorber

The former site of the Fontainebleau Las Vegas  once aimed to be a crown jewel of the Soffers’ Turnberry Associates  just changed hands again in a $600 million deal.

New York-based Witkoff and New Valley LLC, owned by Miami-based Vector Group, announced they bought the resort and casino property at 2755 Las Vegas Boulevard South from Carl Icahn’s Icahn Enterprises.

For Witkoff, led by Steve Witkoff, and Vector, led by Douglas Elliman chair Howard Lorber, the deal marks their debut in the Las Vegas market. In a statement, Witkoff called the property “one of the best physical assets in the country.” The resort is on the Las Vegas Strip, directly across from the Las Vegas Convention Center, which is in the midst of a $1.4 billion expansion and renovation.

Icahn had acquired the failed project for $150 million, after the Fontainebleau Las Vegas filed for bankruptcy protection in 2009 during construction. Aventura-based Turnberry Associates’ Jeffrey Soffer, who spearheaded the hotel development, had blamed the bankruptcy on Lehman Brothers’ collapse and the banking industry’s woes, which led creditors to stop funding construction.

The bankruptcy led to years of legal wrangling amid $675 million in claims. In late 2013, a $178 million settlement agreement with creditors for the Fontainebleau Las Vegas was approved by the bankruptcy court in Miami, which gave contractors about $85 million, and construction lenders most of the remaining balance.

In January 2015, a Miami bankruptcy judge approved another settlement in separate litigation against former officers and directors of the Fontainebleau Las Vegas. The settlement provided $27.5 million to creditors, with $25 million paid by the directors’ and officers’ insurance providers  and $2.5 million by Soffer.

The Fontainebleau Las Vegas was originally planned to have 2,871 hotel rooms, 1,1018 condominium units, a 95,000-square-foot casino, 180,000 square feet of retail space, nightclubs and an array of restaurants and conference rooms. Witkoff said the investors now aim to “unlock its true growth potential.”

In South Florida, a partnership led by Witkoff is also in contract to buy the Weston Town Center for about $90 million, with plans to transform the retail complex into a mixed-use retail destination with a potential hotel component.