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Rumor: Cosmopolitan sold?

Discussion in 'Casino Industry & Development' started by Hyperfocal, Sep 5, 2013.

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  1. Hyperfocal

    Hyperfocal High-Roller

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  2. Pocketaces

    Pocketaces Tourist

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    I think he got a good deal. Run a better casino and don't change anything else.

    :beer:
     
  3. vegasqc

    vegasqc VIP Whale

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    Came here to post this, Robin leach also has it up but with the same source
     
  4. thecarve

    thecarve Misanthrope

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    Doesn't sound like too bad of a deal for Deutsche either.

    Very interesting, if true.
     
    Number 50!
  5. Someone

    Someone High-Roller

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    it would be nice to see a new and experienced operator on the strip (even more so if Genting also comes through), but three billion dollars seems like way way too much

    that seems about 1 to 1.5B too high considering the property has never made money

    either way it would be great for Vegas to get yet another experienced operator into a prime property VS a very disinterested one
     
  6. Pocketaces

    Pocketaces Tourist

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    So you think that group paid double the actual value in this economy and market?
     
  7. mrstealth

    mrstealth High-Roller

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    Let's hope it's true!
     
  8. Someone

    Someone High-Roller

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    yes I do think they paid 33% to 50% too much

    the property cost 3.9 billion to build and while it has an amazing location especially with the Bellagio Fountains in view and the location in general and the surrounding properties it is still well known the current owners want out badly and there are few if any other players in the industry capable of paying the price even at 1.5 billion

    it is difficult to put a price on it because there are few "comps"to go by, but look at what Casinos are selling for in general.....the Lumiere Place in St. Louis was sold for half of what it cost to build.....and yes it is not the Cosmo in Vegas, but it still sold for half off and the Trump in AC was pretty much given away for 20 million and true it is in AC, a terrible property and a market getting bled dry by newly legalized gambling it still set a record for the lowest price out there in that market it was practically given away

    Cosmo is 3,000 rooms and again I freely admit it is a great location, but Fontainebleau could probably be bought for $500 million, finished for 1-1.5 Billion for two billion total and it is 3,889 rooms, but you would still be 1 billion under the 3 billion Cosmo and you would have a brand new property

    and while some might point to the location (and I would agree currently) if SLS opens up and Genting gets built then the north end of the strip will have "new" and in Vegas "new" attracts

    and you absolutely can not leave out the fact that The Harmon coming down is going to be extremely disruptive to Cosmo and Cosmo will either then have it's own vacant lot to deal with or Cosmo will have it's own construction noise to deal with all about the time the hotel will need some cash to freshen the property up

    at this point is is a 3 year old property even if it does not seem that long ago and 3-5 years is when you need to start looking at spending some cash to hold your quality or your quality and reputation suffers

    I would not be looking forward to investing in a freshing on that property while the Harmon comes down and something else goes up and even more so if the north end of the strip can pull off a comeback

    and SLS seems to be coming through and Genting I think will come through as well

    with the FB you could be right in the middle of that, have a brand spanking new significantly larger property (3,899 for FB VS 3,000 for Cosmo) and if you got it bought for $500 million and finished for 1.5 billion you would be 1 billion ahead of paying 3B for the Cosmo in a brand new property with two other new or significantly refurbished properties close by
     
  9. Kickin

    Kickin Flea

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    Wow this is great if its true. At least they're a real casino operator and being right between MGMs two top properties hopefully it'll shake things up. With them and Genting coming in soon, the Pacific Rim is really starting to represent on the strip.

    I agree with thecarve and Someone that $3bn sounds like a good deal for DB. They have a $3.5bn credit facility outstanding that nets to a little less. With the $700mm+ they already wrote off from the first facility I doubt they thought they could get out from under the rest of this for just a couple hundred million more.

    Crazy thing is DB is only paying LIBOR +85 bps on the facility (since its from their own bank!). It would be impossible for Packer to get financing that cheap, not even close. So if this is true I wonder if they arranged the financing for it themselves just so they were no longer the guarantor and operator.

    Here's Cosmo's latest 10-Q: http://www.sec.gov/Archives/edgar/data/1485589/000119312513317381/d536384d10q.htm
     
  10. Max2589

    Max2589 Low-Roller

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    If true, I wonder how this would play out for us Cosmo loyalists. I have my 17th stay coming up real soon and my offers/host have been excellent lately.
    I hope this is not one of those situations where they clear house.
     
  11. lotso-bear

    lotso-bear VIP Whale

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    I have an upcoming comp stay there next week. I hope my reservation isn't affected by this and I hope the check-in lines aren't ridiculous long since the FD agents still have to get used to the system. It's not easy training all of the FD agents with a new reservation system, especially at a 3K room property.
     
  12. oc_guy

    oc_guy Low-Roller

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    Deutsche Bank is hosting a conference next week at Cosmo which I'm attending. I'm sure I can get a solid answer.
     
  13. Chuck2009x

    Chuck2009x VIP Whale

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    I wouldn't question whether or not the deal is in place, but a couple of the things in that web site's post that are supposed to be evidence are kind of ridiculous.

    It said "sources confirmed that as soon as this deal became official, the first thing to go was the old casino reservation and computer system."

    There's been absolutely no change to the functionality of the reservations booking process on their website, which is the last thing I would expect if they had scrapped their system.

    Also, "“This makes a hell of a lot of sense since when I was there Friday they were screwing around with a desk/table in the HL area right in the middle of the entrance and had a guy working on networking cable and power outlets. It all makes sense now"

    Are you kidding? Guys messing around with cable mean the hotel's been sold?

    Never mind, the guy has a quasi-update this morning - the hotel PR dept says it's not true.
     
  14. Pocketaces

    Pocketaces Tourist

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    Great discussion! :beer:

    You seem to make most of my points. And I do agree with yours as well.

    I do have one question, if Cosmo cost 3.9 to build how would you expect a "significantly larger" hotel would only cost 1.5 to build? I think it would be more difficult than you think to use what is already standing.

    Either way, the sale seems more like rumor than anything.
     
  15. Patripman

    Patripman Low-Roller

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    Does anyone else think that if it is a rumor it was possibly started by those who have been involved in the current employee/union situation. It is not unusual to see these types of rumors during a union/management situation, just take a look at all the similar situations that have occurred in the past and continue to plague Atlantic City.

    p
     
  16. Kickin

    Kickin Flea

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    No, I'd bet the source of the rumor is someone from Marquee given its being reported on a nightclub blog. I wouldn't put any faith in the report yet but since Marquee is a major asset it wouldn't be surprising if its operator was deemed a reputable source of any major corporate actions. At the same time I never put any stock into what PR people say because they always deny true reports before they want to make them public. So we can just wait and see...if its true the deal was signed it will be announced very soon.

    I completely agree with Chuck on how laughable the report about seeing guys messing around with the cables sounds. LOL yeah seeing IT guys do their thing is always a good sign a company has had a change of control. :evillaugh
     
  17. Someone

    Someone High-Roller

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    it is not that Fountainebleau cost only 2 billion to build it is the fact that the former owners/developers of that property and their lenders have already eaten a massive loss on the portion of the property that is built and available for purchase

    it has already had 2 billion spent on it and Icahn bought it for $101.5 million so I would imagine he would gladly take $500 million for it

    and the estimates to finish it for $1-1.5 billion are old guesstimates at this time even if it took $2B to finish it you would still be in for $2.5B for about 900 more rooms and a brand new property

    so it is not "cost to build" it is cost to buy and finish

    also The Cosmo was planned and started and being built before construction cost really took a dive......those cost did take a dive during construction of the Cosmo, but it was more than likely way to late to really capitalize on those reductions in cost for the contractors and developers while the FB waiting to be finished now would probably cost somewhat more than the 2009 guestimates construction cost especially in Vegas have not risen dramatically over the recent past even for single family homes because there is still so much excess capacity in available workers and equipment and materials

    also the Cosmo was built and completed as "high end condos" with a large % of the rooms even though they are now being rented as hotel rooms which is why you read comments on here about having kitchens (and I believe even dish washers) in some rooms, but no dishes or utensils to actually utilize those features

    while the FB was designed to also have a large number of "high end condo" units it does not need to be finished out with those features it can be finished out as a more standard hotel and that saves you a small amount of money on cost of equipment/appliances, but more than likely a much bigger savings on not having to actually install all of those items

    if I was a buyer (haha far from it) the appeal to me would be significantly more rooms at a lesser cost, a brand new property VS a 3 year old property, ability to bring in all new vendors and partners VS existing ones, and especially the fact that the north end of the strip may well end up with some of the newest properties with SLS and Genting and being closer to Wynn and V/P which are top properties and even closer to the Vegas convention center and the V/P convention center.......and I would actually not be all that excited about being the only non-MGM property stuck in the middle of MGM land....while I see a benefit to that because of the qualities of the properties I see a downside as well because there is no incentive for MGM to play nice with you

    and while I don't think the Harmon will be imploded I do think they will do a controlled deconstruction and ATTEMPT to make as little noise as possible that will drag the "experience" of that out over a much longer period of time and you can't avoid the truck traffic to cart the rubbish off and the inevitable street closures and other limited access that will come with that extended demolition and then the new construction will probably be as bad or worse

    and at 5-7 years no matter what the Cosmo will need a freshening without a doubt and that will probably be going on right while the Harmon is going down and something else going up or worse the Harmon could come down and something else go up just after that freshening which is a real hit to revenues......closing banks of rooms and spending money on them only to see destruction and construction take place right next door immediately afterwards......hell even CET was smart enough to wait to freshen up the quad (if ever) until after the beep beep beep and jackhammers of LINQ is gone away

    I think the north end will be a bit more attractive as well (if everything comes together) because you will have a larger collection of newer operators and some of the better operators with Wynn, V/P, SLS and Genting and if you were another new operator/non-MGM/non-CET operator in that area that gives that area a real difference factor VS mgm-cet land down south with the Tropicana mixed in for whatever reason just sitting there doing whatever it is they do
     
  18. Pocketaces

    Pocketaces Tourist

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    That all makes sense to me. You make some very good points there.
     
    Last edited by a moderator: Sep 6, 2013
  19. paperposter

    paperposter VIP Whale

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    could we possiblie get real bj tables and food comps now as it was a joke before
     
  20. travelfiend

    travelfiend High-Roller

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    And here is a different viewpoint, have to read a little bit past the marriage/divorce news for Mr. Packer. I am certainly no expert on Casino industry news as I did not know that Packer was involved in the Fontainbebleau project, and is currently one of many being sued over that.

    "News of the split comes the day after a rumor spread that Packer had agreed to pay $3b to purchase the struggling Cosmopolitan casino in Las Vegas. The rumor was quickly quashed by Cosmo officials, who stated simply that the report was “false.” Farfetched might have been a better way of describing the notion that Packer would seek a return to Vegas, given his disastrous experience with the aborted Fontainbebleau project, over which Packer has been sued by irate investors who accused Packer/Crown of hiding cost overruns on the failed $2.9b venture. In May, Packer failed to convince the Nevada Supreme Court to have his and Crown’s names removed from the suit. "

    Full article at, http://calvinayre.com/2013/09/06/casino/james-packer-splits-with-wif-crown-welcomes-osaka-officials/

    BTW, first time I had stumbled upon this Calvin Ayre website, looks like pretty good information, anyone familiar with it?
     
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