The Strip starts a rust belt - Las Vegas dreams foreclosed

3700 Associates, LLC , are the developers of the Cosmopolitan Resort Casino, a $3.9 billion condo-hotel complex on the Las Vegas Strip, the largest private development in the United States. It was to be 8 acres of shops, casinos, hotels, condos, and theaters. It could now be a crumbling and rusting testament to the property credit binge, as they have been notified by their primary lender that it is to begin foreclosure proceedings. ("Foreclosure on Las Vegas Casino to Begin" WSJ)

The move by Deutsche Bank AG, the lender on a US$760 million senior loan, comes after the developer, Ian Bruce Eichner, wasn't able to finalize a deal for new financing. Mr. Eichner in late February cut a tentative deal with two of his other lenders, Global Hyatt Corp. and New York hedge fund Marathon Asset Management, for a possible rescue of the grotesque twin-tower project. But Mr Eichner is no stranger to real estate fuck ups and massive losses going back to 1994. which should make fascinating reading for DB executives anxious to see their loan repaid.

A fast paced, non stop deal maker this is how Eichner sold his idea in 2004 - "This will be the very first opportunity for a buyer to own property right on the Strip. They will be able to take an elevator from their condo-hotel unit directly to the casino floor. There's no other development on the Strip that provides condo unit owners that type of 'one-button' accessibility to the casino," said Eichner. Wow.

Mr. Eichner has blamed the project's problems on the credit-market meltdown and a jump in construction costs since building began in 2005. He said buyer interest in the hotel-condo rooms has been strong. He declined to comment on proposals to take over the project.

Related, led by real-estate tycoon Stephen Ross, has teamed with Starwood Hotels and Resorts Worldwide Inc.'s W Hotel group and an unidentified casino operator to try to take over the $3.9 billion hotel-condominium and casino project.

In December, Related raised $1.4 billion in debt and equity from Goldman Sachs Group Inc., the investment arm of Abu Dhabi and MSD, the investment firm of computer mogul Michael Dell. At the time, Related President Jeff Blau said the company would use the money to snap up distressed projects.

Sounds like a gamble.