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Howard Stutz

Developer Bets on Las Vegas Touch

13 May 2005

LAS VEGAS -- Three weeks after finding himself without a job, former Mandalay Resort Group President Glenn Schaeffer has landed back on the Strip following Thursday's announcement that he will help bring the name of a Miami Beach resort icon to the north end of the boulevard.

Schaeffer, 51, was named president and chief executive officer of Fontainebleau Resorts, a privately-held company founded by Jeff Soffer, a principal with high-rise condominium developer Turnberry Associates. The company purchased the famed Fontainebleau in Miami Beach, south Florida's largest hotel. While based in Las Vegas, Schaeffer will oversee a $350 million remodeling and expansion of the 51-year-old property.

At the same time, Schaeffer will spearhead development of a 4,000-room Fontainebleau Las Vegas hotel-casino, a planned $1.5 billion development that will be built on the Strip just north of the Riviera on 25 acres that once held the El Rancho and Algiers casinos.

Rumors had been circulating among industry insiders that Schaeffer would be hired by Turnberry to oversee the Strip project.

The land fronts the existing Turnberry Place high-rise condominium project that will house approximately 800 residential units once construction is completed on its fourth tower.

Schaeffer, whose two-decade tenure with Mandalay ended last month when MGM Mirage competed its $7.9 billion buyout of the company, said preliminary plans call for the Fontainebleau Las Vegas to open by 2008.

"If we're going to be open in 2008, then we better be coming up out of the ground by the middle part of next year, so we're going to be developing and obtaining financing for the project while we're doing the renovation of the Fontainebleau in Miami," Schaeffer said. "I look at this as creating two flagships, one in Miami and one in Las Vegas."

Fontainebleau Resorts is privately held, and Schaeffer, who collected more than $13 million in stock options when he left Mandalay, according to securities filings, said he is an investor in the company.

He speculated, however, that Fontainebleau would have to seek Wall Street financing for the Las Vegas project.

"Obviously, I have some familiarity in that arena," said Schaeffer, who served as Mandalay's chief financial officer throughout the company's run, including when it was known as Circus Circus Enterprises in the late 1980s and early 1990s.

Turnberry purchased the El Rancho site in 2000 and demolished the shuttered casino. The company had looked at building a London-themed casino on the site until a downturn in the economy brought about by the Sept. 11, 2001, terrorist attacks scuttled development plans.

Earlier this year, Turnberry purchased the site of the former Algiers casino from a rival high-rise condo developer, giving the company a contiguous 25 acres on the Strip to develop as a resort destination.

"The value of land on the Strip just kept on climbing, and the time is right for a project like this," said Soffer, who is based in Miami and spearheaded the purchase of the Fontainebleau in January. "With what is happening in Las Vegas, you look a that site and we can do a tremendous project."

While planning is still preliminary, Schaeffer said he expects the Fontainebleau Las Vegas to have designs similar to the Miami Beach resort that was once one of America's most famous hotels. From its circular ceilings and staircases, to its crystal chandeliers and signature lobby, the Fontainebleau was the backdrop for numerous Miami-based movies, including James Bond's "Goldfinger" and "Scarface," starring Al Pacino.

The hotel has since fallen in stature, replaced by smaller, upscale resorts in nearby South Beach.

"Fontainebleau Resorts will be identified by crisp aesthetics and an over-cool factor," Schaeffer said. "Fontainebleau is a tremendous brand that we will restore in Miami and translate to Las Vegas."

The Miami renovation is expected to be completed in 2007 and will increase the size of the Fontainebleau to 1,750 rooms.

Soffer said he and Schaeffer met in early January, soon after Turnberry purchased the Fontainebleau.

"I told him what we wanted to do in Las Vegas and Miami and he was really interested," Soffer said. "Glenn is well-respected on Wall Street and in the financial communities, so he will play a tremendous role in this company."

Schaeffer said about 30 former Mandalay Resort Group executives would join him at Fontainebleau.

"We'll be flush with Mandalay DNA," he said.