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Best of Howard Stutz

Gaming Guru

Howard Stutz

Report: Billionaire Packer plans to make offer for Cosmopolitan

23 April 2014

LAS VEGAS -- A spokeswoman for Deutsche Bank in New York wouldn’t discuss an Australian press report Monday that The Cosmopolitan of Las Vegas could be sold to a company controlled by billionaire James Packer.

Germany’s largest bank, which opened the 3,000-room Cosmopolitan in December 2010 after it foreclosed on the project’s original developer, is reportedly seeking a buyer for the resort. The Cosmopolitan has never turned a quarterly profit.

The Brisbane Times reported that Crown Resorts, which is controlled by Packer, was planning to “lodge an expression of interest” for the Cosmopolitan by Tuesday.

Bloomberg News recently reported that Deutsche Bank was seeking at least $2 billion for the Cosmopolitan and had four potential bidders lined up. Deutsche Bank took over the unfinished Cosmopolitan from Ian Bruce Eichner in 2008 and completed the project at cost of $3.9 billion.

It’s long been assumed that the bank wanted to unload the property.

The Cosmopolitan reported a net loss of $25.5 million in the quarter that ended Dec. 31 and net loss of $94.8 million on net revenues of $652.5 million for all of 2013. In 2012, the Cosmopolitan lost $106.6 million on net revenues of $595.2 million.

Renee Calabro, the head of press and media relations for Deutsche Bank Americas, said in an email “we decline to comment” when asked about the potential Packer bid.

Crown owns casinos in Australia. Through Melco — a joint venture with Hong Kong businessman Lawrence Ho — Crown owns casinos in Macau and Manila.

Packer inherited pay-TV company Consolidated Media Holdings, a $5 billion business, when his father Kerry Packer died in late 2005. Consolidated Media was sold to Newscorp. in 2012 and Packer pocketed $1 billion.

Today, Packer — who has a net worth of $6.5 billion — is listed at No. 212 on the Forbes List of World Billionaires and is the No. 2 richest person in Australia.

Packer has flirted with Las Vegas in past.

In 2009, Crown terminated a deal to purchase Cannery Casino Resorts for $1.8 billion and was forced to pay a breakup fee and other penalties totaling $320 million.

In 2007, the company ended plans for Crown Las Vegas, which was to built on the Strip between the Sahara and Riviera. The Federal Aviation Administration rejected plans for a hotel tower of 1,888 feet, which would have been the tallest building in the Western Hemisphere.

The Cosmopolitan was originally designed by Eichner as a condominium tower, but Deutsche Bank scrapped the residential idea and converted the units into spacious hotel rooms, many of which have outdoor balconies overlooking the Strip. Several condominium buyers and sales agents sued after they were offered their deposits back.

The casino is 110,000 square feet.

The property, with its two 52-story towers, sits on 8.7 acres between the Bellagio and CityCenter. Hotel revenues of $267.6 million and casino revenues of $155.5 million are both eclipsed by revenues from the Cosmopolitan’s food and beverage offerings, which accounted for $313.8 million.

The Cosmopolitan is best known from its restaurants, including the recently opened Rose. Rabbit. Lie.