The long-planned Drew Las Vegas, a hotel-casino project that has been sitting unfinished on the Las Vegas Strip since the recession, is now apparently a victim of the coronavirus pandemic.
Business Korea reported Monday the project was in default.
In January, New York developer Steven Witkoff, who purchased the development two years ago for $600 million, was found suitable by Nevada gaming regulators. The project has sat largely untouched for more than a decade.
Construction work was halted on the north Strip resort -– formerly known as Fontainebleau – in late March when the outbreak of COVID-19 shut down all gaming in Nevada starting March 18. A source close to the company said Witkoff was close to finalizing the construction loan when the pandemic hit.
In a statement provided late Tuesday to CDC Gaming Reports, Witkoff’s New York-based company said, “This is an unprecedented time, and unfortunately one that affects all hotels, casinos, and construction projects globally. We remain committed to the project and are actively working with our partners and lenders. We are confident that we will be successful in completing the Drew Las Vegas.”
According to the publication, South Korean investors had reportedly put 600 billion Korean won into the project, which translates into $491.8 million in U.S. dollars, and the investors had not received any principal or interest payments. Among the five South Korean investors named by the publication was a subsidiary of Hyundai Motor Group.
The website Vital Vegas first posted the Korean story Monday.
A company source said veteran gaming executive Bobby Baldwin, who was hired as the Drew’s CEO in November, is still with the project. Baldwin, who oversaw the development and operations of the massive CityCenter complex on the Strip, retired as that property’s CEO at the end of 2017.
Witkoff told the Nevada Gaming Commission in January that a real estate construction loan of approximately $2 billion to finish the building would close by the end of February or early March. He also told the regulators he had invested more of his own money into the Drew project than any of his previous commercial and residential projects.
Witkoff committed at the same time to opening the 3,700-room resort by Christmas 2022. The project was renamed Drew for his son, Andrew, who died of a drug overdose in 2011.
The Fontainebleau was 70% complete when the original developers filed for bankruptcy in 2009, leaving the unfinished building as an eyesore and a reminder of the recession.
Corporate raider Carl Icahn acquired the building for $150 million out of bankruptcy in 2010 but never tore down the structure with the hopes of selling the project.
“This was the best deal we’ve seen in the last six years,” Witkoff told the commission, citing Las Vegas’ business climate and the opportunity “to rehab the resort and create a world-class destination. We haven’t seen a property like this coming out of the financial crisis. It was a green light special.”
Witkoff said his team has spent the past 18 months “mapping” the entire 67-story building, including “taking pictures robotically of the property.” He told the Gaming Control Board earlier this month he needed to disprove many of the urban myths surrounding the building.
“We did our due diligence,’” Witkoff said. “The two main points (were that) the work completed on the property was all good and the design was forward-thinking for us to do what we want to complete the building. We know the condition of the entire property.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.