$120m Riviera land sale scrapped, developer cites rising interest rates

Published on: January 3, 2023, 03:15 am.

Last updated: January 3, 2023, 03:15.

The $120 million deal agreed between Chilean billionaire Claudio Fischer and the Las Vegas Convention and Visitors Authority (LVCVA) has been abruptly pulled off the table.

Riviera Las Vegas LVCVA Convention Center land for sale
An aerial view of the former Riviera grounds, which are today owned by the Las Vegas Convention and Visitors Authority. A deal to sell the 10-acre property to a Chilean businessman for $120 million recently fell through. (Image: CBRE)

In October 2021, the two sides announced their tentative agreement for the LVCVA to sell approximately 10 acres of undeveloped land where the Riviera has stood for 60 years. The Riv, as the Strip casino was affectionately known, was purchased by the LVCVA in bankruptcy in February 2015 for $182.5 million.

The government-funded convention and tourism agency paid another $42 million to demolish the former Rat Pack hangout to make way for the Las Vegas Convention Center’s West Hall expansion. The Riviera sat on 26 acres, but the West Hall only needed 16.

The remaining 10 acres were paved and currently serve as an exterior parking lot for the Convention Center. LVCVA has been trying to sell the valuable real estate since early 2019.

Interest rates quoted for termination

Fischer generated most of his wealth through commercial and residential real estate, primarily in South America and his native Chile. It diversified its 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 firm 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 rising interest rates killed the idea.

Chilean press At Tercera reported on representatives from CB Investment SpA saying that substantially higher interest rates would “eat all the profitability of the project”.

The US Federal Reserve raised rates by 425 basis points starting in March 2022. The federal funds rate rose over that period from 0.25%-0.50% to 4.25%-4.5%.

While the feds don’t set mortgage rates, the reserve’s actions have a significant impact on lending. Since the Federal Reserve is essentially the nation’s central bank, both big and Main Street banks typically base their rates on the Fed.

For Fischer, the increased interest has led to less enthusiasm for Las Vegas.

Relisted land

LVCVA has already relisted the 10 Strip-front acres through CBRE, its commercial real estate broker.

CBRE says the property located at 2955 S. Las Vegas Blvd. is for immediate sale. The commercial real estate listing does not advertise a listing price.

Fischer’s retirement is certainly a major blow to the LVCVA. The agency plans to use the proceeds from the sale of the land to help renovate the exhibit halls at the Convention Center.

But Fischer’s retirement wasn’t a complete bust for the LVCVA. Under the terms of the two parties’ tentative agreement, Fischer was required to pay a separation fee of $7 million to LVCVA.

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