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StumbleDeutsche Bank writes down value of Cosmopolitan by $103 million
A view of Harmon Avenue and MGM Mirage’s CityCenter project on Wednesday, Nov. 18, 2009. The Cosmopolitan Resort tower is shown under construction at right.
Thursday, Feb. 4, 2010 | 7:18 p.m.
Sun Archives
- Deutsche Bank drowning in Vegas on Cosmopolitan (11-16-2009)
- Deutsche Bank offers settlement to Cosmopolitan buyers (10-19-2009)
- Fontainebleau: Bank wanted to minimize Cosmopolitan competition (5-12-2009)
- MGM, Dubai World reach CityCenter agreement; lawsuit dropped (4-29-2009)
- Displeased with Cosmopolitan’s interior, bank rethinks decor (3-6-2009)
Deutsche Bank AG, which foreclosed on and is completing the Cosmopolitan casino resort in Las Vegas, said Thursday it wrote down the value of the project by another 75 million euros — or $103 million.
The write-off, the second in less than a year for the project, reflects Deutsche Bank’s reduced profitability expectations for the resort that is due to open later this year on the Las Vegas Strip next to the new CityCenter complex.
“Fourth quarter 2009 net revenues reflect an impairment charge of EUR 75 million on The Cosmopolitan Resort and Casino property, which resulted from a more difficult business outlook for the hotel and casino market in Las Vegas,” Germany’s largest bank said in its quarterly earnings report.
Last April, Deutsche Bank posted an impairment charge of 500 million euros — $653 million at the time — for its Cosmopolitan investment.
The property, with a cost reported to be between $3 billion and $3.9 billion, will have some 3,000 hotel rooms.
The impairment charge is similar to non-cash write-downs other gaming companies on and off the Las Vegas Strip have taken on their properties as the recession has hurt the value of those properties.
MGM Mirage, for instance, in November slashed by 31 percent the value — on paper — of its investment in the CityCenter megaresort complex.
MGM Mirage at that time took $1.1 billion in non-cash charges against earnings to reflect reduced profit expectations for the $8.5 billion development.
Thursday’s charge for the Cosmopolitan is in line with expectations of analysts who say that because of the U.S. recession, Las Vegas will have trouble consistently filling a high percentage of its available hotel rooms until there’s a strong tourism and business travel rebound.
The latest official visitation numbers are from November and show Las Vegas had about 142,000 hotel rooms to fill that month. Those numbers do not include the 5,891 hotel and condo-hotel units at CityCenter that started to open in December.
With 2.9 million visitors in November, the city achieved an occupancy rate of 78.4 percent, off .8 of a percentage point from November 2008 and down a whopping 9.4 points from November 2006, before the recession reduced visitation to the city.
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A challenging design around the Sporting House but my understanding is the casino is spectacular.
Just what we need another bankrupt hotel/casino on the strip!! Ha! what a joke...
Harrah's will buy it, for sure. Won't that be great?
Sporting House?
Only in Vegas can you write down a property by %100 million at a time and call it an investment. Thank harry. You and your son have destroyed this state.
YoWzA!
MORE OF THIS ON THE WAY.
BANKS CAN'T HIDE THEIR MORTGAGE LOSSES ANYMORE CAUSED BY BAD CDO'S (COLLATERALIZED DEBT OBLIGATIONS USED TO BUNDLE BAD MORTGAGE LOANS TOGETHER) HIDDEN IN SPE'S (SPECIAL PURPOSE ENTITIES) AND SPV'S (SPECIAL PURPOSE 'INVESTMENT' VEHICLES) AS OF JANUARY OF THIS YEAR.
WHAT BANKS DID FOR YEARS ON END WAS PURPOSEFULLY HIDE ALL THEIR DISASTROUS MORTGAGE LOSSES SECRETLY OFF-THE-BOOKS, AND LEGALLY, TOO.
NO MORE. FASB (THE FINANCIAL STANDARDS ACCOUNTING BOARD), CHANGED THE RULES, BIG TIME.
NO MORE DOUBLE SETS OF BOOKS BEING KEPT BY BANKS ANYMORE HIDDEN IN THE BACK ROOMS.
WHEWWWWEEE. AND THE BANKS HATE IT, TOO.
FOR YEARS THEY GOT AWAY WITH KEEPING THEIR INSIDE MORTGAGE BANKING SCREW-UPS SECRET AND LOCKED UP IN THE SHADOWS WITH A SECOND SET OF BOOKS.
THAT ALL CHANGED ON JANUARY 1, 2010.
THE BANKING AND FINANCIAL INSTITUTIONS FOUGHT THIS CHANGE TOOTH AND NAIL TO THE BITTER END FROM HAVING THEIR SHADOW SET OF BOOKS EVER BEING BROUGHT OUT INTO THE LIGHT OF DAY.
SO NOW THEY HAVE TO PUT THEIR SCREWED-UP MORTGAGE LOSSES ON THE BOOKS, OR MAYBE FACE A LITTLE JAIL TIME.
MORE OF THIS TO COME. LOTS MORE.
Looooook ooooooout beloooooooooooow.......
Here is another property that will fail. It was developed and designed by people with no gaming experience, only wall street money manipulation experience, same thing with City Center. Has anyone tried to drive to City Center? I have tried twice and cannot find the public parking. I tried Valet and the attendant tried hitting me up for a bribe to park my Cady. The days of experienced casino operators developing and running these big properties is over. The new tactic is how hard and how long can we gouge the people visiting our properties? The cosmo was built and designed to be recognized as a chic casino with cool design. It is not built to be gambler friendly. Totally ego driven that will fail
Deutsche Bank came to town and rolled the dice on this project and Fontainebleau and lost. When will they ever learn? This is so 'Vegas. Go 'Vegas!
wizard -- except for your stuck caplocks key, your post is quite a peek at the Man Behind the Curtain we're not supposed to pay attention to.
What you described here is a lot of the cause behind the lost notes of ordinary people's homes. No note = no note holder = no mortgage = no legal way to foreclose. Yet DoucheBank is one of the leading foreclosure players in this state. The math is really quite simple.
NRS 104.3501, people. Use it and head off your foreclosures.
I wonder when they start hiring? I need a job that will last only one month so I can collect unemployment for 2 years.
Agreed. I know casino guys who DB brought in to "consult" them on casino design etc. They gave DB their recommendations and DB dismissed them. This is a mess already and will be for the foreseeable future, unless DB writes down the investment significantly more.
There are also structural problems with the project. I believe it has something to do with too much groundwater under the building itself, and a lot of remediation is needed (or will be needed) to get this thing open.
And once it's open? Another 3,000 rooms to cut into a shrinking pie of total visitor revenue. UGH!!
Why all the hatin'? Don't you WANT Las Vegas to get back on its feet?
This is another hotel that will eventually open and provide jobs. That's a good thing. Great location. I hope Penn National buys it and puts people to work finishing it, and then puts people to work inside it.
BeFair- It's not about "want", it's about being realistic regarding present and future economic conditions. If and when Cosmo opens, it will kill as many construction jobs at the project as it creates in hotel/casino jobs, not to mention other hotel jobs lost when properties on life support finally go under.
Too many hotel rooms and not enough total visitation and revenue; something's gotta give!
The "BANKS" and more specifically, the Goldman Sachs and investment banks - operated these ponzi schemes for a decade. The modern World bought our mortgages because they trusted the mortgagee and the institutions that sold them. Americans paid their bills and obligations and the SPV's and CDO's were a safe investment.
America has lost more in terms of creditability, personal net worth, jobs and quality of life than 100 Al Qaedas' could ever inflict upon us.
There should be Department of Justice charter buses filled with these crooks going to court appearances on a daily basis...but no, not even civil charges? Speaking of crooks" Bush hires the former CEO of GS to design the bailout. We the taxpayer purchased the remaining toxic paper for 100% on the dollar...then the bonuses flew just in time for the Holidays.
And Wall Street wonders where all the hate comes from?
doubledown_dead -- if you have a home mortgage, go to your copy of your Note. Look for the clause that allows the lender/Note Holder to convert your Note into a security which it may then trade at will and keep all the profits. Then feel free to correct me here if you can find it -- you won't.
Carol Moore, one of the parties to the now famous Ohio DoucheBank In re Foreclosure cases, discovered through the court the Bank had traded her Note 660 (count 'em -- 660x) in less than a year!
"If you're going to take my house away from me, you better own the note." -- Joe Lents (who hasn't made a payment on his $1.5 million mortgage since 2002) in Bloomberg's 2/22/08 "Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish"
double_deadender AGREED. Deutsche bank, enough said they ruined me and I'm one of those people still paying and trying to prop up the nation, however it's starting to take it's toll on my children soon I may have to protect my own and do a strategic walkaway. amazing how the government keeps feeding the big bonuses of the extremly wealthy. soon we too will be a country of extremly wealthy and extremly poverty stricken and if you aint extremly wealthy now guess which side you and your family will fall to. Pray and Pray a lot.
Is it just me,or does this place look 'out of place'? It ts too close to the road , and it ruins the look of The Bellagio.
How big is the casino? What kind of marketing is expected from this company? Who will manage the Hotel and Casino?
For those who don't know it, Deutsche Bank also made mortgage loan commitmentss for local residential developers of ridiculously inflated high dollar houses. The commitments provided mortgage financing for buyers of homes in the $750,000+ category. Deutsche Bank immediately packaged the loans and sold them to third parties as mortgage backed securities.
If you look at the foreclosures of new homes in Anthem, Southern Highlands, Summerlin, etc. the name Deutsche Bank shows up time and time again as foreclosing lender. Deutsche Bank is one of the major holders of "shadow inventory" of foreclosed homes not listed on the Las Vegas Multiple Listing Service.
Deutsche Bank sought out local homebuilders, whose names are impolite to mention, offering what amounted to blanket loan commitments on high priced tract homes being sold to "new home buyers". Deutsche Bank never bothered to figure out if the prices of those new homes were actually supported by market comparables. In many cases, Deutsche Bank made these jumbo loans on the basis of 5% OR 10% down.
In looking at the wreckage of home values in Las Vegas, Deutsche Bank is right up there with IndyMac Bank and Countrywide as the culpable, reckless mortgage lenders.
CynicalObserver -- take a closer look at DoucheBank and IndyMac foreclosures. It's more like a tag team. When one wishes to challenge their actions in court it's a nightmare just to get them served. The bank has many names and fronts. IndyMac on one deed of trust I reviewed shows addresses in Phoenix, Austin and Kansas City.
Thanx for the history lesson. Anybody else tired of the suits feeding on us?
"The paper bubble is then burst ... there will be a general revolution of property in this state." -- Thomas Jefferson by letter to John Adams, 1819, from "The Works of Thomas Jefferson, Federal, Vol. 12
what an ugly, ugly mess that secion of town has become.
ugly buildings all jammed together.
yuck.
i have a photo of the strip i took from my first condo on mountain vista / sunset back in 2001 and i almost get misty-eyed thinking about how all those resorts had 3 or 4 unique things in each of them and now...blah...just bebe stores, starbucks, and cheesy night clubs, and texas tea slot machines over and over and over and over again.
yawn.
DB is the big expert on Vegas and gambling, they should go back to building beer halls.
I think it's all a big mess.
The Strip got ruined by overbuilding and all character is lost.
I do like to stay at the Mirage. It has a certain style from a time past.
Plus they have a lot of long time staffers and they really care about their guests.
Though to tell the truth I really miss the western style resorts and the motel era.
STEVE GREEEN and burnemandturner - re your article (and the post) on the Cosmo having structural issues. If that is true, it may have something to do with the WATER AQUIFIER that flows underground under the SW area of the strip, and also under Mandalay Bay.
If you recall, Mandalay Bay also had a foundation problem - IT WAS SINKING, while they were building it. They had to PROP IT UP - inside and out with "stakes in the ground and attached to the building. I guess it worked.
However, If COSMO has similar problems - and it is due to the same water aquifier under it, then they have some work to do. I would almost believe it could be another sinking problem - because CityCenter and COSMO next door are very high (50 stories?). This is putting an extrodinary amont of physical weight on the ground beneath all the buildings in the area. If there is an aquifier under these buildings we will just have to wait and see what happens.
ANOTHER AREA OF CONCERN IS THE LACK OF A WATER PUMPING STATION FOR FIRE USE dedicated to CityCenter.
Four years ago, I was told there needs to be a dedicated WATER PUMPING STATION that would be be near enough to CityCenter to provide adequate WATER PRESSURE to the high level floors. At the time (2005), I was that such a PUMPING STATION did not exist, and it was possible that adequate WATER PRESSURE might not be available tothe upper levels of those buildings in the event of fire. Whether that's true or not remains to be seen.
The LV Fire Chief has told a reporter at the LV SUN that there IS sufficient water pressure available for CityCenter. OK. I hope so.
I am concerned because I remember their WERE SPRINKLER SYSTEM deficiencies in the (old) MGM Grand Hotel (now Bally's) that made it difficult to fight that 3 hour fire in 1980. In that case, the fire killed 85 people and caused millions of dollars of damage. One of the big reason for execessive damage, and deaths, was that the fire code back in 1980 did not require water sprinklers on every floor. Smoke inhalation was also a problem, and more.
Since the fire in 1980, Las Vegas has made state-of-the-are improvements in fire protection in every hotel-casino.
Howvever, when the current fire code was written (back then), there were no 50 story buildings on the strip, and thus, a Water Pumping Station was not needed. So, I would like to know that the LV Fire department has this potential problem covered. It would be a tradgey if a fire broke out and there was insufficient water pressure to fight it. It you or anyone else knows if this base is covered, I would like to read your comments about these two points. Thanks.
Link to the news report on the MGM Fire in 1980:
http://www3.gendisasters.com/nevada/5076...
Like said above the Cosmopolitan is a bad shoehorn in - but it does have one use. When walking south in the morning around Bally's, the Cosmo does block the blinding sun reflecting off that giant mirror called Aria.
They can see the handwriting on the wall.
And to think,they built the MGM Grand for $1 Billion....
On an emergency basis they can obtain water from the Bellagio fountain lake if other water system resources fail reference to firefighting measures.....
Mandalay Bay during construction was sinking up to .75 of an inch per week before the foundation improvements were implemented.
I cant believe anyone in their right mind would want to construct this kind of hotel without much character at a location between two megaresorts thinking they can sell out hotel rooms and timeshare condos.
I agree the area is way overbuilt with an awful lot of weight around there as once there were sand dunes rather than bedrock.
Bellagio has the most character within that portion of the block as far as attraction goes...Guess the three marketeers seem to think why stay there when you can stay at a place with less character while paying more for it.
The only way a water pressure issue would crop up would be if it was a matter of inadequate supply to the building its self.
Fire sprinkler systems are no different from domestic water systems in that they rely on pumps to supply the water at a design (and/or code) pressure to the various zones of the building.
So, unless the water supply to the system/building its self is inadequate (or the sprinkler system pumps failed), there wouldn't be a pressure-related problem getting water to sprinkler heads and/or fire department hose valve connections within the building.
I have not read or heard of any structural problems at Cosmo. There were structural issues at CityCenter (as reported by this newspaper) but they had nothing to do with sub-surface conditions on the site. I can't imagine things would be any different at Cosmo since it and CC essentially share the same site.
Lots of dopey remarks about Cosmo!
Keep them coming, you experts make me laugh.
Douchebank also pulled the funding for the Ritz Carlton property in Lake Las Vegas too. They are just wreaking havoc all over Nevada.
The firm of Lurie & Park continues to fight for purchasers of the Cosmopolitan Hotel & Resort Casino in Las Vegas, Nevada. On Friday, March 26, 2010, Lurie & Park filed a third lawsuit against the Cosmopolitan developers -- this time on behalf of East (Beach) Tower purchasers.
For more information, click on following link: http://bit.ly/cosmoeast or contact Lurie & Park at (818) 380-3022.