Foreclosures Make Future Of New Las Vegas Project Bleak

Posted in Foreclosure, March 24th, 2008 |

It is a chain reaction. Foreclosures are telling on the economy and the latter is casting a doubt on completion of multibillion dollar casino plans in Las Vegas. It is more difficult to get credit to finance new schemes. The Cosmopolitan Resort and Casino as well as Plaza Casino and Hotel are in troubled waters. There is a strong opinion that these projects might not see the light of day.

It has been reported that Bruce Eichner’s firm, 3700 Associates LLC, that owns The Cosmopolitan is about to be foreclosed by its main lender, the Deutsche Bank. Eichner has commented that the bank is working with him to find new avenues for finance so that the project goes ahead without losing speed. But it seems that new financiers are not easy to locate. In January $760 loan default was declared by the bank. It has also said that it will go ahead with foreclosure proceedings, although no final date has been announced. Eichner too was silent about having or not having received a foreclosure notice. The company involved with the construction, Perini Building Corporation, said that would not stop its ongoing work because of an agreement it has reached with Deutsche Bank. The cost of the Casino, next to Bellagio, would climb to $3 billion.

The Plaza officials are scheduled to appear before Clark County Commission to reply to reports that have been published saying that the project would be kept on hold. The Plaza is being built after the famous Plaza Hotel of New York. The Elad Group comprising of many Israeli investors are the owners of planned The Plaza Casino and Hotel. Reports have been published in Israel saying that because of the credit crunch in US, the project might be kept in abeyance. The Elad group however insists that the news is just incorrect rumours and that the project will be completed on time. The cost will be $6 billion.

At one time it was thought that no recession or recession-like situation could touch establishments like casinos. But the enormity of the investments has made it vulnerable to pin pricks. The gambling must be equally on a grand scale to make it run. Any old client will not do – they must be jumbos having fat bursting wallets ruling empires. Their likes must fill the rooms’ everyday to keep the joint oiled and running. Otherwise there will be risky leaks.