F-blew sold; Turmoil at Westgate

It’s official. Carl Icahn has the Fontainebleau monkey off his back. He found a couple of chumps, er, investment firms in the form of Witkoff Group and New Valley, who bought F-blew for a cool $600 million. When you consider that Icahn bought the incredible bulk for $148 million, recouped a bit of that from asset sales and tax write-offs, he comes out of this risky real estate play smelling like a rose. (VitalVegas is all over the story.) Putting the best spin they could on a hugely risky gambit, Witkoff’s PR people defensively described Fontainebleau as a “significantly undervalued resort hotel … Witkoff spent four months conducting its due diligence on the resort and market prior to the acquisition, and has identified numerous ways to unlock the significant underlying value of the property to generate strong returns for its business and the Las Vegas community.” To put that in perspective, hideous F-blue is described by its new co-owner as “well designed.”

Yes, but first it has to be finished, Witkoff and New Valley will have the devil’s own time of that, considering that the cost will be at least $1.3 billion, not counting remediation from years of exposure to the elements, plus the replacement cost of everything that Icahn sold to help recover his purchase price. CEO Steve Witkoff described the massive structure as “one of the best physical assets in the country” and “ideally located.” Well, once it and the Las Vegas Convention Center expansion are finished, yes. In the meantime, everyone is stuck in a holding pattern, waiting for Genting Group to finish Resorts World Las Vegas (an act of patience that was the undoing of SLS Las Vegas) as the signal that the north Strip is “on” again.

It would be great if Witkoff and New Valley plunged into a resumption of work on F-blue straightaway and made something out of what has been the Strip’s worst eyesore (even the amputated stump of Sheldon Adelson‘s St. Regis Residences has been prettified). But raising completion funds is going to be a heavy lift and conspicuously missing from the announcement is any indication of a resort- or casino-oriented partner, which the new owners are desperately going to need. Anybody want to volunteer? In the meantime, everybody involved comes out a winner … except for homeowners at Turnberry Place who are now doomed to behold the hideous backside of the F-blew parking garage for all eternity. Somebody had to lose and Fate decreed it was them.

(P.S.: When the Fontainebleau buyer was described as “very politically connected” we had a horrible premonition that it was Trump advisor, Colony Capital CEO and buffoon Tom Barrack. If things had gone that route it would have proven again that history repeats itself first as tragedy and then as farce. Whew!)

* It’s not often that a casino company advertises litigation but Westgate Las Vegas broke with normal protocol to trump a lawsuit against online travel booking agency Amoma.com. According to Westgate, Amoma is a renegade outfit that was selling Westgate rooms at below their Westgate-set minimums. Or, as Westgate put it, Amoma was “advertising and intentionally and purposefully engages in unfair competition by undercutting established best available rates … by offering unapproved wholesale rates to consumers which cannot be honored.” In other words, buyers of room nights from Amoma would find a chilly reception at the Westgate check-in desk. One wonders how many disenfranchised consumers were led astray in this fashion.

Westgate’s Jared Saft said, “We’ve filed this suit to protect not only the interests of our resorts, but of our business partners as well. This website is a nuisance to the otherwise peaceful ecosystem of online travel purchasing.” S&G is a big supporter of peaceful ecosystems, so we wish Westgate well.