Fontainebleau Asks to Shed Empty Leaseholds

LAS VEGAS-The developer of Fontainebleau is hoping to shed a couple of leaseholds for which it is currently being charged more than $80,000 per month, according to bankruptcy court filings. One of the leases is for office space while the other was for an employee recruitment center. With construction halted indefinitely, the company has few remaining employees and no need to recruit for the finished project.

Miami developer Jeffrey Soffer controls the Fontainebleau and Turnberry companies. Most recently, Fontainebleau asked to get out from under a lease it signed in January 2008 for an employee recruitment center at 6623 Las Vegas Boulevard South, which sits within Town Square, a mixed-use development at Las Vegas Boulevard and Interstate 215.

Fontainebleau never occupied nor improved the space and has not tendered rent or the security deposit contemplated by the lease agreement, according to court filings. The lessor is Turnberry/Centra Sub LLC, a sister company to Fontainebleau. The lease rate was $53,023 per month for the first year and then began increasing at a rate of $2,300 per month. The lease runs through April 30, 2014, according to court filings.

Earlier in the month, Fontainebleau asked the court for permission to cancel the lease for two office spaces (suites P-100 and P-300) at 101 Convention Center Drive that it leased in fall 2007. The monthly charge for the two spaces, which expire in March 2010 and June 2010 respectively, is approximately $31,000, according to court filings. Last month, the lessor, Tomorrow 33 Convention LP, served Fontainebleau with a notice of default and fully drew Fontainebleau’s $117,000 letter of credit, according to court filings.

Tomorrow 33 Convention LP is controlled by TFMGP 33 LP, which is controlled by TFMGP 33 Corp., whose vice president is Cheryl S. Willoughby. Willoughby is also executive VP and COO for BGK Group, a private real estate company based in Santa Fe, NM, whose European affiliate is Hamburg, Germany-based Tomorrow Fund Management.

Also this month, Fontainebleau sought permission to begin canceling some meeting and convention contracts that it will not be able to meet due to the construction delay. The meetings were supposed to take place during the first half of 2010. The company also sought to void employment contracts with employees that left the company after the bankruptcy filing.