Follow the money: Dubai to Vegas to Miami Beach

By Liz Benston

Wednesday, April 9, 2008 | 12:18 p.m.

The $3 billion Fontainebleau Las Vegas resort had lined up financing last year before the markets went sour. It has an estimated $780 million in equity financing, including the value of the land as well as hard cash from developers including the Soffer family that owns Florida condo giant Turnberry Associates.

So why does Fontainebleau Resorts need more money?

The answer goes beyond the $375 million cash infusion that Nakheel Hotels, a hotel subsidiary of the Arab government-owned conglomerate Dubai World, is making in Fontainebleau's historic, namesake hotel in Miami Beach. The hotel is undergoing a $500 million renovation expected to open in the second half of the year.

Nakheel Hotels, also part of MGM Mirage's joint venture to build a CityCenter-like development at the southwest corner of Sahara Avenue and the Strip with Kerzner International, announced the investment with Fontainebleau Resorts today.

Money from Dubai could help Fontainebleau Resorts execute its goal of expanding its beachy, Miami-born hotel brand around the world. It's also not a bad idea to line up more cash these days, what with Wall Street banks leery about financing resorts in a down economy.

Similarly, MGM Mirage – which is getting more than $5 million from Dubai World in part to help finance CityCenter – is forging a long-term, mutually beneficial relationship with the like-minded Arab company, which is developing major resorts along the Persian Gulf at a breakneck pace rivaling Las Vegas.

A major U.S. gateway, Miami has been a "key target" for Nakheel Hotels, which is expanding its portfolio in North America, Asia and Europe, Chief Executive Joe Sita said in a statement.

The Fontainebleau in Las Vegas is expected to open in 2009, along with the massive CityCenter and Cosmopolitan resorts.

While there's no evidence that the scope of the 3,000-room Fontainebleau Las Vegas has changed, many other developers have been forced to increase their resort budgets because of design changes and upgrades made during the construction process.