Former developers of Drew Las Vegas launch real estate venture
After their run at completing the former Fontainebleau fizzled out, ex-developers of the towering Las Vegas project have launched another venture.
Developer Steve Witkoff and Howard Lorber, chief executive of cigarette maker Vector Group, are looking to raise $250 million for a yet-to-be-determined real estate tech venture.
They formed a so-called blank-check company, Ocean Drive Acquisition Corp., to conduct a merger or other business combination. It does not have a target but aims to “capitalize” on management’s ability to “source, acquire and manage companies that provide technological solutions and innovation targeting the real estate industry,” according to a March 10 filing with the Securities and Exchange Commission.
Witkoff is CEO of the venture, with Lorber as chairman.
As described by the SEC, a blank-check company either has “no specific business plan or purpose” or intends to acquire or merge with another entity.
According to Reuters, it is a shell company that uses proceeds from an initial public offering to buy other another firm in a deal to go public.
Witkoff’s namesake company declined to comment for this story, instead pointing to the SEC filing “for all available information.” Representatives for Vector Group did not respond to a request for comment.
High hopes
Witkoff, founder of The Witkoff Group, and Vector subsidiary New Valley, a real estate firm also led by Lorber, partnered in 2017 to buy the unfinished Fontainebleau on the north Strip for $600 million. The deal raised hopes that the 60-plus-story project, which went bankrupt in 2009 after the real estate bubble burst and is one of Las Vegas’ tallest buildings, would finally open.
They renamed it Drew Las Vegas in honor of Witkoff’s son Andrew, who died of an OxyContin overdose in 2011 at age 22, and set out to finish the roughly 3,800-room hotel-casino in 2022.
Witkoff told the Review-Journal in January 2020 that he was close to obtaining a roughly $2 billion construction loan for the project. But last March, as Las Vegas rapidly shut down over fears of the coronavirus outbreak, he suspended construction of the resort.
Contractors later filed tens of millions of dollars’ worth of liens claiming unpaid bills for their work at the Drew, and several ex-employees sued Witkoff, alleging they were laid off from the project amid the pandemic and weren’t paid what their contracts called for.
Full circle
The skyscraper is now back in the hands of Florida developer Jeffrey Soffer, who was part of the group that originally built the Fontainebleau during the mid-2000s construction craze. Soffer teamed with the real estate wing of conglomerate Koch Industries to reacquire the property last month but did not say when they expect to resume construction.
The new owners acquired debt on the project Feb. 11 and gained ownership of the property the same day through a process that lets people avoid foreclosure, county records show.
Similar to his time with the stalled blue tower, Witkoff set out to build big in Las Vegas more than a decade ago, only to see the plans flame out after the economy crashed.
He and other investors teamed with diamond magnate Lev Leviev in 2007 to buy 60 acres just east of the Strip for $625 million and develop a hotel-casino project.
But the inflated real estate market soon crashed. Their project, which called for 6,700-plus hotel rooms and more than 328,000 square feet of casino space, was never built, and lenders eventually foreclosed on the site.
Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.
