|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
Apr. 24, 2009 - Lenders this week stopped funding construction of the Fontainebleau Las Vegas, endangering the biggest real estate project in the Soffer family's portfolio.
The move involves $800 million needed to finish the $3 billion project. The Vegas Fontainebleau filed suit Thursday to force the banks to loan the money. The defendants are Bank of America, JPMorganChase and other major banks receiving federal bailout funds. That bailout connection makes the withheld money "more egregious," the suit claims.
A Fontainebleau press release says the banks' move jeopardizes the developer's ability to finish the 3,800-room casino hotel slated to open this fall on the Las Vegas Strip.
Launched at the same time Jeffrey Soffer purchased the Fontainebleau Miami Beach, the Vegas property was slated to launch a global string of Fontainebleau casinos.
But a depressed real estate market foiled plans to finance much of the effort by condo-hotel sales, and a sharp decine in Vegas tourism led analysts to warn the property wouldn't be able to make debt payments once it opened.
The Soffer family's development firm, Turnberry Associates, put a $100 million completion guarantee on the project, according to analyst reports. Fontainebleau executives have said the Miami Beach property is not endangered by the Vegas troubles, since the two properties are under separate corporate ownership.
A source close to the Vegas project said construction has not stopped. It costs about $100 million a month to keep construction on pace, and the project has roughly $130 million in cash available, the source said.
Last year, Soffer pumped $200 million cash into the Vegas project to cover cost overruns. The money came after he sold a 50 percent interest in Fontainebleau Miami Beach to an investment group run by the Dubai government, according to analyst reports.
Media representatives for Bank of America and JPMorganChase could not be reached for comment Thursday night.
In the press release, Soffer accuses the banks of reneging on a deal to fund the Vegas Fontainebleau through completion.
"We need them to live up to their promises so that we can complete a landmark project that will revitalize tourist visitation to Las Vegas," Soffer said.
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