The $120 million agreed-upon transaction between Chilean billionaire Claudio Fischer and the Las Vegas Convention and Visitors Authority (LVCVA) has been abruptly yanked off the table.
The two sides in October 2021 announced their tentative deal for the LVCVA to sell about 10 acres of undeveloped land where the Riviera stood for 60 years. The Riv, as the Strip casino was affectionately known, was acquired by the LVCVA through bankruptcy in February 2015 for $182.5 million.
The government-funded tourism and convention agency paid another $42 million to demolish the former Rat Pack hangout to make way for its Las Vegas Convention Center’s West Hall expansion. The Riviera stood on 26 acres, but the West Hall needed only 16.
The remaining 10 acres have been paved and presently serve as outdoor overflow parking for the Convention Center. The LVCVA has been trying to sell the valuable real estate since early 2019.
Interest Rates Cited for Termination
Fischer generated the bulk of his wealth through commercial and residential real estate, primarily in South America and his native Chile. He diversified his portfolio to include casino gambling in 2016 by acquiring Chilean casino operator Dreams.
Fischer subsequently formed a new gaming entity — Sun Dreams — through a partnership with South African hotelier Sun International. Fischer’s investment arm, CB Investment SpA, through one of its many subsidiaries, took full ownership of Sun Dreams in 2020 after buying out the group’s partners for about $160 million.
Today, Sun Dreams owns and operates 19 casinos in Chile, Argentina, Panama, Colombia, and Peru. Fischer had hoped to make his next bet on the Las Vegas Strip. But escalating interest rates killed the idea.
Chilean media outlet La Tercera reported on reps from CB Investment SpA saying that substantially higher interest rates would “eat up all the profitability of the project.”
The US Federal Reserve has raised rates by 425 basis points since March 2022. The federal funds rate during that time grew from 0.25%-0.50% to 4.25%-4.5%.
While the feds do not set mortgage rates, the reserve’s actions greatly impact borrowing. With the Federal Reserve essentially the nation’s central bank, both large and Main Street banks typically base their rates on the feds.
For Fischer, higher interest resulted in less enthusiasm for Las Vegas.
The LVCVA has already relisted the 10 acres of Strip frontage through CBRE, its go-to commercial real estate broker.
CBRE says the property, located at 2955 S. Las Vegas Blvd.,is for sale immediately. The commercial real estate listing does not advertise a listing price.
Fischer’s withdrawal is certainly a major blow to the LVCVA. The agency plans to use the proceeds from the land sale to help renovate exhibit halls at the Convention Center.
But Fischer’s pullout wasn’t a complete bust for the LVCVA. Under the terms of the two parties’ tentative agreement, Fischer was required to pay a $7 million separation fee to the LVCVA.
The post Riviera $120M Land Sale Scrapped, Developer Cites Rising Interest Rates appeared first on Casino.org.