The developers of Fontainebleau Las Vegas have secured a $2.2 billion construction loan from a group of lenders, including investment giant Blackstone and New York-based casino landlord Vici Properties, in a bid to finish the hotel-casino project.
Vici Properties and Blackstone are putting $350 million and $500 million respectively into the deal – expanding the pair’s already significant footprints on Las Vegas Boulevard. Details on the remainder of the financing were not disclosed.
Michael Eglit, head of US originations for Blackstone’s real estate debt strategies group, said in a statement that the firm is “pleased that its capital will enable the completion of a fantastic addition to the Strip.”
Casino capital
The 67-story Fontainebleau is scheduled to open in the fourth quarter this year, almost two decades after Florida developer Jeffrey Soffer initially unveiled plans for the resort in 2005. Soffer teamed with conglomerate Koch Industries’ real estate wing to re-acquire the property in early 2021. Construction resumed more than a year ago.
Brett Mufson, president and partner at Soffer’s firm Fontainebleau Development, said Las Vegas has been “extraordinarily resilient” amid the wobbly US economy, and that Vici and Blackstone have deep pockets and deep knowledge of the market.
As Mufson sees it, their involvement with the Fontainebleau is a “huge rubber stamp that we’re headed in the right direction.”
Hotel footprint
In 2019, Blackstone purchased Bellagio’s real estate from MGM Resorts International for $4.2 billion and leased it back to the casino giant. In 2020, it joined forces with MGM’s real estate spin-off on a $4.6 billion deal to acquire MGM Grand and Mandalay Bay and leased the properties back to MGM. And in 2021, Blackstone bought Aria and Vdara from MGM for nearly $3.9 billion and leased them back.
Blackstone also still owns a stake in The Cosmopolitan. It purchased the flashy hotel-casino for $1.73 billion in 2014 and sold it for $5.65 billion in a deal that closed last year.
On the other hand, Vici has expanded its holdings with the $17.2 billion buyout of MGM’s real estate spin-off. As part of the deal, which closed last year, Vici acquired several MGM Resorts-operated properties along the Strip including The Mirage, Park MGM, New York-New York, Luxor and Excalibur.
It also acquired a stake in MGM Grand and Mandalay Bay. Last month, Vici announced it was taking full ownership of the two properties, saying it would pay Blackstone nearly $1.3 billion in cash and assume the firm’s share of debt on the resorts.
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