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StumbleCompany seeks bankruptcy after Elvis Presley resort plans fizzle
Thursday, April 22, 2010 | 9:38 a.m.
Sun Coverage
FX Luxury-owned land
A company with strategic land holdings on the Las Vegas Strip filed for Chapter 11 bankruptcy reorganization Wednesday after its plans for an Elvis Presley-themed resort fell through.
The filing was made in U.S. Bankruptcy Court in Las Vegas by FX Luxury Las Vegas I LLC, which is part of New York-based FX Real Estate and Entertainment Inc.
The prepackaged bankruptcy calls for the land to be auctioned and says that if the auction doesn't yield an acceptable price, insider investors have agreed to buy it out of bankruptcy at a discount to the debt owed.
The investors include American Idol TV show owner Robert F.X. Sillerman, chairman and chief executive of FX Real Estate and Entertainment; Paul Kanavos, president of FX Real Estate and Entertainment; and Las Vegas real estate investor Brett Torino.
FX Luxury listed assets of $139.6 million against liabilities of $492.6 million. Key creditors are the New York branch of Landesbank Baden-Wurttemberg, owed $268 million; and NexBank of New York, owed $220.8 million.
The company owns 17.72 acres of land at the southeast corner of Las Vegas Boulevard and Harmon Avenue that are occupied by numerous small businesses and a 125-room Travelodge motel. Tenants on the land include the Hawaiian Marketplace with multiple tenants, Smith & Wollensky, McDonald’s, Fatburger, Walgreens and Sunglass Hut.
The property is across the Strip from MGM Mirage's CityCenter development, where another Sillerman company receives royalties from the Viva Elvis production at the Aria hotel-casino thanks to Sillerman's control of Elvis Presley trademarks.
In court papers, FX said a February appraisal found the property's liquidation value in a forced foreclosure scenario would be about $137.7 million.
FX said in its filing that it plans to auction the land as part of the bankruptcy process, but if there is a lack of qualified bidders, the investors have agreed to acquire the property for about $260 million including $15 million in cash and a new mortgage of about $245 million.
The property produced revenue of $19.5 million in 2008, $17.3 million in 2009 and $3.6 million during the first quarter of this year, FX said in its filing.
In explaining the bankruptcy, FX Luxury President Mitchell Nelson said in an affidavit: "The current global financial crisis has had a particularly grave impact on the Las Vegas real estate market, including a substantial reduction in the number of visitors and per visitor spending, the abandonment of, and/or loan defaults related to, several major new hotel and casino development projects as well as publicly expressed concerns regarding the financial viability of several of the largest hotel and casino operators in the Las Vegas market."
"The current economic climate has also adversely affected the properties’ commercial leasing activities and, as a result, debtor has failed to maintain its previously high tenant occupancy rates amid these market conditions. In addition, market forecasts indicate Las Vegas may experience a prolonged decline in the development of new hotels and other entertainment venues, which could adversely affect any potential redevelopment of the properties for the foreseeable future," Nelson said in his statement.
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Locally owned and independent for more than 50 years.
Too bad, that is one themed resort that would be a smash hit.
Elvis has left the building.....
Wow, an appraisal says it's worth $138M, but we'd like a new loan for $245M. I'd like that deal for my house!
maybevegas, lots of people in Las Vegas already have that deal. It's called being underwater.
The Elvis theme is dead. Long live the Michael Jackson show.
Maybe a Jackson theme resort. It could come with a Ferris wheel and a zoo. It could have costume parties and free child care for parents that want to go gamble. It could even have a place for adults to act like they haven't grown up. If only we could think of a name for such a place. I guess that idea could never ever land.
$7.8 million an acre. Still pretty rich. But I bet someone could do something with that.
ahhh...time to let the elvis stuff go. even the YOUNGEST of his fans when he was at his peak are in their late 40s and 50s and nobody born after 1980 even knows who he is.
vegas needs a really cool "pop art" museum and gallery someplace on/near the strip.
This property should continue with the businesses that already occupy the site if they are profitable, and paying their rent in full and on time. If development plans are made for it, this would be the ideal location for a sports arena.
It's probably a blessing in disguise that plans for an Elvis-themed casino fell through. It was a dated concept anyway. How many Elvis fans are still alive? And those that are, do they have the money and/or are they healthy enough to travel to Las Vegas just to visit an Elvis casino?
They plan upon getting a new mortgage for roughly double its current appraised value? Who's underwriting that loan?
Besides, the current revenue from the existing mall continues to decline (3.6 Mil for the 1st qtr X 4 equals 14.4 Mil for the year, more or less) so where's the additional cash gonna come from to service the note?
...And the hits just keep on comin'!
bgrebs wrote:
"maybevegas, lots of people in Las Vegas already have that deal. It's called being underwater"
Yeah, but when they got the loan, the value appeared to be there. That's not the case in this instance.
I knew you MJ fans would jump on this.
Its got nothing to do with the popularity of Elvis, who will never die. its the financial crisis in Vegas.
Just look at The Elvis Video concert currently touring Europe. Thousands are attending that!.
and its estimated close to 75,000 are attending the Elvis Festival this year.
I doubt they will still be putting on MJ themed shows 30 yrs after his death.
By the way Im from Australia and nobodys talking about MJ here anymore.Its not even a year since his pasing and the MJ fad is already starting to fade.
Jophiel,
I too am from Australia and people are still talking about MJ. The recent Sony deal, Cirque show and even reports about Dr Murray have all made news here and generated discussion. I know of people who are not necessarily big MJ fans and have only just seen 'This Is It' and loved it. Just because you are not a fan does not mean the entire country has forgotten someone of his renown.
I'm not too sure what some of you are talking about, but the majority of people in North America, well below the age of 40, are quite familiar with Elvis. It's been 30+ years and he still has a huge fan base.
Anything, done with good taste, can yield profitable results.
Like it was stated Las Vegas is not going to see anymore growth in the gaming/entertainment industry for quit a long time.The is a complete shame considering the compitetion is so low here right now These Casino Corperations have driven this town so far down with their ability to abuse the employees and guest that We really need a new player in town quickly to make these guys honest
Harrahs and MGM are real scumbags and need to be harnessed by the Gaming Board.This want happen until the economy returns and there are new players on the strip.The gaming board is in their pocket and Harrahs and MGM want to keep Vegas down unless it is them building a new resort.They have a stronghold on the citizens of Clark County and they love the power and wil not give it up of Course they will all be taken over by the Chinese here in the future
I'm not a Michael Jackson fan, but I do think that the Cirque show with the MJ theme will be a huge success.
Of course, Las Vegas and Elvis have been closely associated for years, and the Elvis themed resort would have appeal beyond the die hard Elvis fans. Not sure if a MJ themed resort would do as well. His appeal would be mostly to a younger crowd and he never was associated with LV the way Elvis was. Remenber "Viva Las Vegas"?
Elvis may have died in 1977, but his appeal lives large in Las Vegas.
This day in age, Investing in ANY new large resort project in LV would be foolish due to over-capacity and shaky economy.
Who cares Elvis, MJ, they both sucked a lot of hot air. A Jerry Springer theme would work, wait that's already on T.V. An Ernest P. World ( Hey Vern ) theme would go big out here!
Ever consider a Doors themed resort?