Fontainebleau Development, led by Miami billionaire Jeffrey Soffer, is teaming up with the real estate arm of Koch Industries to revive a massive, 63-story casino resort project that has sat empty and about 75% complete on the Las Vegas Strip since it was constructed more than a decade ago.
The move comes after New York developer Steve Witkoff had tried to revive the project. Witkoff Group reportedly suspended payments last year on loans for the project and stopped construction.
Soffer’s father, developer Don Soffer, is best known for buying 785 acres of marshland north of Miami in 1967 and essentially creating the city of Aventura. His company, Turnberry Associates, developed a portfolio of upscale properties in South Florida including the Turnberry Resort and the Aventura Mall. Near the Las Vegas Strip, it built several condo tower complexes in the early 2000s: Turnberry Towers and Turnberry Place. The company has also developed properties in Nashville, Boston, Washington, D.C., and the Bahamas.
In 2005, Turnberry Associates was run primarily by Don’s children, siblings Jeffrey and Jackie Soffer. That year, Turnberry bought the historic Fontainebleau Hotel in Miami Beach, once frequented by stars like Frank Sinatra, for $325M and began a $1B renovation. Around the same time, Jeffrey Soffer announced that he would also develop Fontainebleau Las Vegas.
Construction began on a 24.5-acre site, and the 735-foot hotel would become the tallest building in Nevada. But in 2008 the global economy tanked, and instead of opening in 2009 as planned, the project went bankrupt.
In 2010, billionaire Carl Icahn acquired the Vegas property, which was becoming an eyesore, out of bankruptcy for $150M, but never updated nor opened it. He sold it in 2017 for $600M to Steve Witkoff and New Valley LLC, a subsidiary of cigarette maker Vector Group.
Witkoff renamed it The Drew after his late son and planned a $2B update, with the property to open in 2020 with 500K SF of meeting space and 4,000 rooms branded as a Marriott Edition and JW Marriott, plus potentially a bridge to connect to the nearby Las Vegas Convention Center. However, amid the coronavirus pandemic, Witkoff’s group reportedly ran into financial troubles, construction stopped and workers sued.
In the meantime, Jeffrey and Jackie Soffer broke their company in two, with Jackie leading Turnberry and taking control of properties including the Aventura Mall, and Jeffrey launching Fontainebleau Development and retaining the Miami Beach hotel and other properties.
On Feb. 11, Dallas-based Koch Real Estate Investments, an affiliate of Koch Industries led by political megadonor Charles Koch, announced it would acquire the resort at 2777 South Las Vegas Blvd. in partnership with Fontainebleau Development.
“We believe strongly in the Las Vegas market and see the property as a great opportunity to contribute to the long-term success and positive trajectory of this vibrant and innovative region,” Koch Real Estate Investments President Jake Francis said in the statement.
The Las Vegas Review-Journal reported that Fontainebleau Development President Brett Mufson, previously an executive with Witkoff’s firm, said his company was evaluating all of its options. A Marriott spokesperson told the paper that Marriott remains the hotel operator.
Meanwhile, Korea Times reported Sunday that Korean investors in The Drew are alarmed and at risk of losing up to 300B won ($270M). Business Korea reported last year that South Korean investors have invested double that figure in the project.
