The investment bank Deutsche Bank has taken the first step towards the foreclosure of the $3 billion Cosmopolitan Resort and Casino Project.
Ian Bruce Eichner, developer and owner of the company, said that he is working with Merrill Lynch and Deutsche Bank to find some new investors. The construction loan for the casino was in default by $760 million on Wednesday.
Eichner said “This action by our lender comes as no surprise [...] “With the current challenges within the real estate and debt capital markets, which are out of our control... we both anticipated and planned for this.”
The casino, which is under construction and expected to open during the later half of 2009, is located between the Bellagio casino resort and the CityCenter casino complex on the Las Vegas Strip. It is a 2,998 room high-rise casino with condo-hotel rooms which would allow buyers to rent out the rooms to hotel guests and share the fee with the resort management.
Some observers have speculated that the weakening condo market may have been a major contributor to the problems with the project.
The company said that demand for the units was strong, and that it was not the cause of the financing problem.
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