Drew Las Vegas, former Fontainebleau, property acquired by “deed in lieu”
When Drew Las Vegas changed hands this month, the unfinished mega-spell wasn’t acquired through a typical sale.
Clark County records show that the new owners incurred debt on the North Strip hotel-casino project on February 11 and, on the same day, acquired the property from developer Steve Witkoff through a ” deed in lieu of foreclosure “.
A deed in lieu, as it’s called, transfers real estate ownership while avoiding the foreclosure process. According to the document, the Drew property is valued at approximately $ 615.5 million.
It is unclear how close the former Fontainebleau came to facing foreclosure, and the terms of the transaction remain unknown. But the deal brought the latest set of owners for the longtime skyscraper after the coronavirus pandemic led Witkoff to suspend construction nearly a year ago.
It was also a complete moment for original developer Jeffrey Soffer, who partnered with buy the project of more than 60 floors – one of the tallest buildings in Las Vegas and a towering reminder of the last in southern Nevada two economic implosions.
Through a public relations firm, Witkoff’s namesake company declined to comment on Monday.
Las Vegas real estate broker Michael Parks, a CBRE group hotel-casino specialist, said an act in lieu is usually done because a property is in financial difficulty and such transactions are “more frequent during this period. of economic crisis “.
He also confirmed that a deed in lieu could be registered because a homeowner is underwater, meaning their mortgage debt exceeds the value of the property.
Some borrowers, he said, “just give up and give it back to the bank.”
The real estate wing of conglomerate Koch Industries has partnered with Florida-based Soffer firm Fontainebleau Development to acquire the 75% completed Drew Las Vegas project, according to a February 11 press release. The conditions were not disclosed.
The companies have not announced details of their plans, including when they plan to resume construction.
A representative of Fontainebleau Development said Monday that the firm “does not wish to comment at the moment”.
Koch Industries, run by billionaire political megadonator Charles Koch, did not respond to a request for comment.
It wasn’t the only act taking place on the Strip recently. At the beginning of January, the mortgage lender TPG Real Estate Finance Trust acquired about 27 hectares mostly vacant real estate along the northern and southern edges of the resort corridor through deed in lieu of foreclosure.
Stop and start
The plans for the Fontainebleau were unveiled in 2005, and the project, led by Soffer and former Las Vegas casino manager Glenn Schaeffer, was inaugurated in 2007. But the real estate market quickly collapsed, the economy soared and the project went bankrupt in 2009.
Billionaire Carl Icahn acquired the shelved complex in 2010 for around $ 150 million and, after leaving it largely untouched, sold it in 2017 for $ 600 million to Witkoff and Miami New Valley real estate company, a subsidiary of cigarette maker Vector Group.
Witkoff renamed it the Drew in honor of his late son Andrew, who died of an OxyContin overdose in 2011 at the age of 22. He told the Review-Journal early last year that he was on the verge of securing a roughly $ 2 billion construction loan for the project, but in March, as Las Vegas quickly closed by fear of the coronavirus epidemic, it shelf construction from the station.
The entrepreneurs subsequently deposited tens of millions of dollars in privileges alleging unpaid invoices for their work at the Drew. Several ex-employees have also Witkoff continued, alleging that they were fired from the project amid the pandemic and were not paid according to their contracts.