Fontainebleau, what’s really up with you?

Fontainebleau Las Vegas' preview center opened last week with little fanfare but lots of questions about when, or if, its 1,018 condominium units will go on sale.

Officials for the $2.9 billion mixed-use development insist the 3,815-room project is on schedule to open in 10 months despite a recession that has slashed gaming revenue and visitor numbers on the Strip.

The two-story preview center, across from the construction site next to the Skyy condominiums north of Circus Circus, includes a model of the project, three hotel room floor plans and a short film introducing some of the amenities at the project.

Officials, however, have been unavailable for interviews, only issuing statements through a company spokeswoman.

The owner, Fontainebleau Resorts, instead used last month's unveiling of a $1 billion redevelopment of the Fontainebleau Miami Beach to increase "brand awareness" of the Fontainebleau name.

Howard Karawan, chief operating officer of Fontainebleau Resorts, said in a statement last week that the Miami opening, which featured the "Victoria Secret Fashion Show" on CBS, brought the name "incredible media exposure."

"The momentum continues to build as business levels and media interest are very strong," Karawan wrote. "While these are challenging economic times, we are extremely encouraged by the response we have had to the Fontainebleau brand."

The preview center show hypes the project's seven-acre pool deck, 27 restaurants including a Nobu and a 5,000-square-foot chocolate shop. There will also be a 68,000-square-foot spa with 55 treatment rooms.

The Strip resort will also have a 100,000-square-foot casino and a 300,000-square-foot retail center called The Runway.

An employment center seeking to hire 6,000 workers will open in the spring at Town Square.

Fontainebleau Resorts, which received a $4 billion loan last year, has enough cash to complete the project, according to a November note by bond rating house Moody's Investor Services.

Problems may arise once the $2.9 billion project opens, however, if gaming revenues and visitor numbers continue to fall, one analyst said.

"The likelihood of continued weak gaming demand trends in Las Vegas increase the risk that the company will not be able to meet its debt service burden once the project opens in late 2009," Moody's bond analyst Keith Foley wrote Nov. 6.

Moody's downgraded approximately $2.5 billion of corporate family debt and raised its probability of default rating to Caa1, indicating substantial risk of default, from B2, or highly speculative.

Fontainebleau Resorts, which is controlled by Miami-based developer Jeffery Soffer, initially planned to raise $700 million to $900 million through condominium presales, but the condo-hotel market has struggled in recent months.

Only 60 percent of the 599 condominium units at Palms Place have closed sales since February, and Trump International Hotel & Tower stopped marketing nearly 300 units to focus on closing its current contracts and its hotel business.

The Signature at MGM Grand had five foreclosures between Dec. 4 and Dec. 9, according to Blockshopper.com, a Chicago-based real estate data service.

The Fontainebleau or its parent company could court additional investors to relieve some of its debt load.

Melbourne, Australia-based gaming company Crown Limited paid $250 million in April 2007 for a 19.6 percent stake in Fontainebleau Resorts.

A subsidiary of Dubai World bought a 50 percent stake in the Miami property in April for $375 million.

Dubai World, however, has already invested $6 billion for a 9.4 percent stake in MGM Mirage and 50 percent interest in the $9.1 billion CityCenter project. CityCenter could pose a more direct challenge to the Fontainebleau. The mixed-use Strip development with 6,300 hotel rooms is scheduled to open around the same time as the Fontainebleau.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.