Deutsche Bank Sells Las Vegas Casino For $1.7bn

German financial institution Deutsche Bank has sold its Las Vegas casino, The Cosmopolitan, with the ill-fated gambling venue having failed to make a profit since it first opened in 2010. Private equity giant Blackstone will now be hoping to have better luck from its $1.7bn (£1bn) investment than either Deutsche Bank or the resort’s original developer, Bruce Eichner, who lost the then unfinished property after defaulting on a $700 million construction loan back in 2008.
The $4.3 billion Cosmopolitan is located on the Las Vegas Strip, but throughout its brief four year history has failed to return a profit, instead continuing to lose around $100 million annually.
Unfortunately for Deutsche Bank it decided to enter the casino development business not long after the 2008 financial crisis struck, ultimately occurring at a time when casinos were reporting dramatic slides in revenues, and property prices were falling by more than 50%. Deutsche Bank was not unusual in that regard, however, as other banks such as Goldman Sachs and Morgan Stanley have also had to contend with huge losses coming from their casino property investments.
Following the sale of The Cosmopolitan, Deutsche Bank’s head of noncore operations, Pius Sprenger, said: “As part of our Strategy 2015+, the bank is committed to reducing its non-core legacy positions in a capital efficient manner which benefits shareholders. We are pleased to have agreed to this sale and to have delivered on our commitment.”
Nevertheless, Las Vegas’ casino market seems to be be showing signs of recovery lately, and new owners Blackstone, who already enjoy success in the hospitality sector, will  now be hoping to enjoy similar success at its 2,960 hotel bed-roomed Cosmopolitan hotel, complete with 1,325 slot machines and 121 table games.
Furthermore, the venue reported a 9.6% rise in revenues last year to$653 million, with EBITDA increasing 56% to $103 million compared to 2012.
“This is a very large, quality hotel with a good location on the strip and it is an attractive price. Also the tide is turning in Las Vegas,” explained an analyst familiar with Blackstone.