‘Fear of failure’ drives developer as he looks to revive a shuttered Las Vegas Strip project By Howard Stutz, Executive Editor, CDC Gaming Reports January 28, 2020 at 7:00 pm For more than a decade, the unfinished Fontainebleau was viewed as a hulking eyesore on the northern end of the Las Vegas Strip and a stark reminder of the Great Recession that crippled Southern Nevada’s tourism community. Steven Witkoff, however, only sees opportunity in the 67-story tower, which is now speckled with pockmarks where windowpanes from the bluish glass facade disappeared over time. He views the structure as the Strip’s next “world-class resort,” not just a building that was 70% completed when construction work halted in April 2009 and the former owners placed the 24-acre site into bankruptcy. Drew Las Vegas developer Steven Witkoff (center) with general counsel Katie Lever and gaming attorney Frank Schreck If he’s correct, the New York developer will be celebrated as a visionary, having brought back to life a building than many believed could never be saved. “A project of this magnitude always makes me a little bit scared,” Witkoff told the Nevada Gaming Commission last week when he earned a finding of suitability for the renamed Drew Las Vegas. “I live the with the fear of failure.” Witkoff looks forward to facing gaming regulators again, this time to be fully licensed for the Drew, but that’s at least 30 months down the road. The task now is finishing the 3,700 room hotel-casino. He said the building is in better condition than many suspected. “Since the financial crisis, we have developed in all major markets in the U.S., as well as Europe. We just haven’t seen a property that could be rehabbed like this particular site,” Witkoff said. He reiterated that comment following the hearing. “I’m not just saying it. (The Drew) is in the best shape of any building I’ve ever renovated,” Witkoff said. “We heard all the rumors. As for the glass, we already have replacement glass. Windows falling out wouldn’t bother us. It would bother us if we had a structural problem.” That isn’t the case with the Drew. Witkoff said the steel and rebar are “solid” and that there was “no floor deflection,” meaning the cement was poured properly. The site has a full heating plant that works “perfectly,” and the building’s air conditioning and elevators are all in working order. Witkoff credited Southern Nevada’s dry climate with keeping the structure viable. Witkoff expects the construction will be completed by November 2022, with an opening to come no later than mid-December of that year. The Drew is both a business venture and a personal project for Witkoff. The building is named for his late son, Andrew, who died of an OxyContin overdose in 2011. A portion of the Drew’s profits will be invested into a charitable foundation in honor of his son. “It was important to be able to create a business deal so that his name lives on,” Witkoff said. “It represents a lot to me and my family. It’s a spiritual thing.” Witkoff also plans to build multi-family housing in Las Vegas, with an eye toward providing affordable living space that could benefit some of the Drew’s employees. He has also committed to allowing Culinary Workers Local 226 to organize the resort’s non-gaming staff. But that aforementioned “fear of failure” oversees many of his decisions surrounding the Drew. He spent months initially making sure the building was viable. The Drew Las Vegas, formerly the Fontainebleau, from 2016/ CDC file photo “We had a 60-day period to do our (initial) due diligence,” Witkoff said. “Since that time, we know every imaginable condition of the property. In many circumstances, a renovation can be more complicated than ground-up construction. A casino green field project from start to finish might take five years. So two years is actually a pretty tight schedule.” Witkoff, whose portfolio once included Manhattan’s historic Woolworth Building, also has “skin in the game.” Gaming Commission Member Deborah Fuetsch noted Witkoff has “four times more equity (in the Drew) than the largest commitment you’ve made in a single transaction in 32 years.” Witkoff corrected her. “It’s actually now five times, but it’s growing willingly.” His investment started with the $600 million he and investors paid Carl Icahn in 2017 for the shuttered building. He expects to close on an approximately $2 billion real estate construction loan by the end of February or early March. He said early construction is already underway, with various stages of preparatory work needing to be completed “before you send thousands of people into the building.” Opening the Drew as a successful integrated resort in 2022 would make the building’s troubled past an historical footnote in the property’s overall story. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.