Here We Go Again: The Drew Sold to Koch Real Estate Investments
Here we go again!
In the latest twist in the “Cavalvade of WTF” that is The Drew (and before it Fontainebleau), the much-maligned hotel-slash-eyesore has been sold to Koch Real Estate Investments.
County records show The Drew sold for $350 million.
Witkoff Group purchased the abandoned Fontainebleau for $600 million in 2017. The Drew, it seems, will never be.
Steve Witkoff, has been mum about details of the sale.
Witkoff never found the construction financing needed to open The Drew (the project went into default in June 2020), so he sold it to the company once involved in Fontainebleau’s development. Ah, the circularity of the universe.
The purchase of The Drew is in partnership with Fontainebleau Development.
While short on details, the news release from Dallas-based Koch Real Estate Investments included a legally-required upbeat quote from Jake Francis, President of Koch, “We believe strongly in the Las Vegas market and see the property as a great opportunity to contribute to the long-term success and positive trajectory of this vibrant and innovative region.”
If nothing else, Koch already has a handle on how news releases work in Las Vegas, so there’s that.
It’s worth noting the news release didn’t mention The Drew or Steve Witkoff at all. Translation: “It’s awkward.”
The tribulations of Fontainebleau and Drew could fill up Al Gore’s Intertubes, but here’s the short version:
* Construction of Fontainebleau Las Vegas began in Feb. 2007 on the site of the former El Rancho and Algiers.
* Construction was halted in 2009 when the project went belly up due to the recession. Painfully, Fontainebleau was a mere 25% away from completion. And we’ve all been there,
if you get our drift.
* Wildly wealthy Carl Icahn purchased the bankrupt Fontainebleau project in January 2010 for $150 million, or about what Icahn typically finds when he looks under his couch cushions.
* In Oct. 2010, Icahn sold off much of the Fontainebleau furnishings. Downtown’s Plaza famously decked out its rooms with Fontainebleau’s furniture and Downtown Grand snagged a couple of escalators.
* In August 2017, Witkoff Group purchased Fontainebleau for $600 million. Yes, we broke the story, but stop singing our praises so much, it’s embarrassing.
* In some glorious behind-the-scenes drama, a number of executives were reportedly poached from Resorts World by Drew CEO Bobby Baldwin. The executives were promptly laid off and lawsuits ensued. Karma and whatnot.
So, what happens with Fontainebleau now?
First, and most obviously, The Drew won’t be called The Drew anymore. Touching story, but awful name for a Las Vegas resort. We’re calling it Fontainebleu Las Vegas until we’re told otherwise.
Steve Witkoff believed renovating the building would ultimately cost somewhere in the neighborhood of $3 billion.
While Koch Real Estate Investments presumably has the deep pockets needed to potentially open Fontainebleau, it would probably be ill-advised given the landscape of Las Vegas.
Hotel supply has outpaced demand in Las Vegas for some time, even prior to the pandemic. Visitation was flat, a situation brought about largely by gambling being made legal across the country.
The current version of Fontainebleau would have a metric hell-ton of rooms to fill, about 3,780.
Vegas watchers are already nervous about Resorts World. This new resort, not far from Fontainebleu, is bringing 3,500 rooms to the market in the summer of 2021.
There have been lots of lofty predictions about growth based upon things like sports and conventions, but at this point, it’s hard to say what that’s based upon other than wishful thinking.
We suspect Koch will take a wait-and-see approach, sitting on this asset until market conditions improve, should that ever happen.
There’s also a chance Koch is looking at this site for the land. That means Fontainebleu could come down and the site could be re-imagined as something that has a better chance of success.
In the meantime, we’ll take any movement on the Fontainebleu site as progress, although we’ve had our hopes dashed before.
Here’s a link to the Koch Real Estate Investments site. Fair warning, it’s baffling.
Here’s a link to Fontainebleu Development. Reminder, it’s pronounced “fountain blue.” Yes, it’s a French word, but that’s not how it’s pronounced in the states.
For now, the blue monster remains, with its sad wrap and its blown-out windows, a monument to plans gone pear-shaped and dreams unfulfilled.