Thursday, June 4, 2020 / by Ken Couture
The tallest building on the Las Vegas Strip will likely stay empty and abandoned instead of becoming the area’s newest casino after the developer defaulted on loan payments.
According to Business Korea, The Drew Las Vegas resort development project has “suspended principal and interest payments” on the property since May 8.
The default likely came as the project experienced a setback when construction was paused in March due to the COVID-19 pandemic. The Witkoff Group-owned building secured $2 billion in loans at the start of the year to fund further construction costs of turning an abandoned building into a casino.
More than half of the funding came from major American investment banks, and the rest came from South Korean investment firms Mirae and NH Investments & Securities.
According to the Korean media outlet, the deferred payments are applied to the U.S. banks, but if those entities decide to scrap the project, take some losses and sell the assets they acquired in the real estate deal, the Korean investors will take heavy losses.
The site of the proposed casino is considered by many in Las Vegas to be cursed, an eyesore, or both.
Miami-based developer Turnberry Associates broke ground on the 68-story building in 2007 in hopes of creating the Fontainebleau Las Vegas, a recreation of the upscale Miami Beach hotel.
Construction was put on hold when lenders backed out of the deal in the wake of the 2008 financial crisis. The property was purchased by billionaire Carl Icahn in 2010 for $150 million, who spent $10 million per year to have it sit empty on the north end of the strip. Icahn sold it to Steven Witkoff in 2017 for $600 million.
The casino, named The Drew, after Witkoff’s late son who died from a drug overdose in 2011, was initially scheduled to open in 2020, but several setbacks pushed the opening date to 2022. Even as recently as January, it looked like the completion was just a matter of time and not money.
At the start of the year, Witkoff convinced regulators in Carson City that the project would be finished. He said spent “$10 million in research” to determine that it would be a profitable venture to complete the casino.
According to a January report from CDC Gaming, Witkoff dispelled rumors about the unfinished project and the Nevada Gaming Control Board found his group suitable to run a casino.
“This is essentially a high-end renovation project,” said Witkoff at the meeting. “We’ve x-rayed the entire building.”
Last November, Witkoff hired poker royalty to help run the casino when he announced that hall of famer Bobby Baldwin would become the Drew’s first CEO. Baldwin was also named Vice Chairman of the Witkoff Group in that same announcement. Even if the casino isn’t built, Baldwin will continue working for the group.
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