Fontainebleau has the cash to keep rising

By Liz Benston

Monday, Jan. 19, 2009 | 2 a.m.

At a time when some companies are strapped for cash, Fontainebleau Resorts is expected to have enough money to open the $2.9 billion Fontainebleau Las Vegas, as planned, in October.

The company, a collaboration between former Mandalay Resort Group executives including arts supporter Glenn Schaeffer and Turnberry Associates, one of the nation’s most prolific and successful condominium developers, received $4 billion in financing in 2007, well before the credit markets shut down last year.

Good timing enabled Fontainebleau to move forward with the 3,815-room resort while others have stalled.

With analysts expecting the recession to continue at least through this year, some developers are delaying resort projects planned during the credit boom.

Fontainebleau executives could not be reached for comment on the resort’s time frame and prospects.

The Fontainebleau takes its name from the famed Miami Beach, Fla., hotel, purchased by Turnberry in 2005 and reopened after a $1 billion makeover in November as part of the company’s plan to expand the Fontainebleau brand worldwide.

A-list celebrities flocked to the iconic Miami Beach hotel in the 1950s and 1960s. Until the arrival of luxury hotels and hip night life in recent years, the area suffered from much the same decline in reputation as the Las Vegas Strip, which became a getaway for retirees.

The Fontainebleau was reborn into Miami Beach royalty, with two hotel towers, a 40,000-square-foot spa, convention space and night life.

The Las Vegas resort promises 28 restaurants and lounges including a 5,000-square-foot “chocolate experience,” award-winning chefs including Alfred Portale and Scott Conant, Michelin-rated Cantonese cuisine, a noodle shop and a gelato bar. Fontainebleau also will feature a 60,000-square-foot spa with 33-foot-high ceilings above plunge pools, “hypnotic columns of light” and “varying intensities of rain showers.” At least four outdoor pools will offer various settings, including a “whimsical topiary garden,” a bar with an open kitchen and Champagne and caviar service poolside.

Fontainebleau Las Vegas is located just north of the Riviera and south of the Sahara on the Strip.

The Las Vegas resort had planned to sell as many as 1,000 condo-hotel units, which banks have largely sworn off as risky investments.

Some analysts say Fontainebleau might end up renting the condo-hotel units as regular hotel rooms if they don’t sell.

Turnberry has survived previous boom-and-bust cycles in real estate. After this growth cycle, the south Florida company will have built nine of the 15 existing and under-construction high-rise condo and condo-hotel towers on or near the Strip, including Turnberry Place and the Signature towers at MGM Grand.

For now, it seems money isn’t a problem for the Fontainebleau.

Australian gaming giant Crown Ltd. bought a 19.6 percent stake in the company for $250 million in 2007. A subsidiary of Dubai World, which also owns 50 percent of CityCenter with MGM Mirage, bought a 50 percent stake in the Miami Beach property for $375 million last year.

Although the Miami Beach hotel has recaptured the buzz it commanded in its early days, the Las Vegas resort, which will stand among other luxury towers, will be starting from scratch.