|By Arnold M. Knightly, Las Vegas
Review-JournalMcClatchy-Tribune Regional News
January 7, 2009 --Recession or not, a joint venture led by a financially struggling Israel-based development group plans to build the world's largest hotel in Las Vegas.
A holding company that includes the AFI Group, formerly known as Africa Israel Group, is scheduled to ask Clark County commissioners today for use permits to build a 6,745-room hotel, casino and retail complex on 60 acres along Harmon Avenue west of the Hard Rock Hotel.
The largest hotel in the world now is the 6,118-room First World Hotel in Malaysia. Many of the largest hotels in the world are already in Las Vegas, including the 5,690-room MGM Grand, the 4,408-room Luxor and the 4,341-room Mandalay Bay and The Hotel resorts.
The permits would give the group two years to begin construction on the project or seek an extension.
Approval of the permits would allow the development group to go to investors and banks seeking financing for the project. No price on the project was available.
Bill Lerner, a gaming analyst with Deutsche Bank, said it is surprising to see someone pursue such a large project in the current credit markets.
"Greenfield development [building from the ground up] in this environment is a difficult strategy to achieve returns in excess of cost of capital," Lerner said.
The project is listed on the AFI Group's Web site as "Edge (Las Vegas)" with a short description saying construction is planned over three phases.
AFI Group owns or is developing commercial and residential properties in Israel, Russia, Central Europe, Eastern Europe and New York, Florida, California and Arizona.
The AFI Group is the investment company of multibillionaire Lev Leviev, who made his fortune in the Israeli diamond business.
Leviev's real estate division, which is publicly traded on the Tel Aviv stock market, has been selling assets to repay debt.
The firm said in August it will sell a 49.9 percent stake in the Clock Tower on Madison Avenue, 49 percent of the Times Square Building and its full stake in the 23 Wall Street retail project and 15 Broad Street condominium building, all in New York City.
Africa Israel Investments CEO Izzy Cohen told Bloomberg News in late December that the company will suspend all projects not already under construction and eliminate jobs this year to control costs.
Lerner said even though the developers are seeking approval now, they probably won't put a "shovel in the ground until years from now" after the economy improves.
"My sense is that perhaps this is a development story for 2013 or forward," he said. "At that time, maybe we will be in a better position to absorb it."
The project would have four high-rise towers.
Reuters reported in July 2007 that Africa Israel had taken a 49 percent stake in the project, with the remaining stake split between financial firm Credit Suisse, previous land owners Edge Group, and a New York-based partnership between developers Steve Witkoff and the Cipriani.
The land was acquired for $751.3 million, or $12.5 million per acre, in May, when New York-based developer Alex Sapir paid $75.1 million for a 10 percent interest, according to county records.
Plans for Las Ramblas, which was tied to actor George Clooney, and then the $2.5 billion W Las Vegas, which was canceled in May 2007, were approved for the site. Neither was built.
The W Las Vegas was approved for 3,000 hotel-condominium units, and Las Ramblas was approved for 4,000 hotel-condo units.
Most land-use permits approved by the county during recent years have expired.
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Copyright (c) 2009, Las Vegas Review-Journal
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