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The Cosmopolitan Las Vegas
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FINCEN
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Joined: 08 Mar 2006
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PostPosted: Thu Jan 13, 2011 12:59 pm    Post subject: The Cosmopolitan Las Vegas Reply with quote

The Cosmopolitan opened in December in the heart of the Strip boasting 3,000 rooms and spacious suites spread among two high-rise towers. All at a time when the Vegas economy has been called one of the worst in the world. Considering the fact that the Cosmopolitanís next-door neighbor, generated an operating loss of $1.27 billion the first nine months of last year, it would appear the Cosmo is yet another terrible investment in a paper economy. The dream of developer Ian Bruce Eichner, the Cosmopolitan seemed a solid bet when he secured $60 million from Deutsche bank to purchase the land on which he planned to build his dream palace.

Unfortunately for Eichner, the economic collapse led him to default on his $760 million construction loan in January 2008 prompting Deutsche bank to foreclose. At this point Deutsche bank has $1 billion tied up in the Cosmopolitan and they decide to press forward with the project instead of writing it off as a loss. Ultimately that decision may prove to be a major mistake. Gaming revenues are down, hotel room rates are down and the Citycenter, the aforementioned next door neighbor appears headed for bankruptcy. Unemployment in Las Vegas is a staggering 16% and 70% of Vegas homeowners are upside down in their properties.

Eichner's pretentious plans have all but fallen by the wayside. Attempts to draw visitors into their establishment have proven amateurish and predictable. Reports of paying Jay-Z $1 million for a New Years concert failed to make a dent in the negative capital flow. Things promise to get worse with Macao's gaming ventures booming and Texas and Florida set to approve gaming ventures, it would appear Deustche bank would have been better off writing off the Cosmopolitan as a loss instead of pouring $3.4 billion into a hole.
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