A large bank is trying to sell its ownership in a casino. No, not Goldman Sachs trying to shed its ownership of Sigma X, the bank’s dark pool exchange for stock trading. Deutsche Bank AG (USA) (NYSE:DB) is trying to sell the Cosmopolitan of Las Vegas for $2 billion, according to a report in Bloomberg News, citing unnamed sources.
Risque advertising to a hip crowd
The Casino, which engaged in risqué advertising with the slogan “just the right amount of wrong,” might have been the wrong company for Deutsche Bank to keep. The casino cost $3.9 billion to build and has yet to turn a profit.
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“It’s a compelling asset, great rooms, great location, terrific restaurants and a great reputation among the younger, hipper crowd,” Rob Heller, chief executive officer of Spectrum Gaming Capital LLC, an investment bank in New York that isn’t involved in the sale, was quoted as saying in the report.
Casino owner be default
Deutsche Bank AG (USA) (NYSE:DB) didn’t ask to get into the Las Vegas casino business, it occurred as a result of a margin call that couldn’t be met. Deutsche Bank loaned the money to the developer Eichner, who defaulted. The bank then took possession with some very bad timing – just as Nevada property values sank and travel to Las Vegas dropped as well.
In order to complete the project, the budget almost doubled under the bank’s watch. Among the many issues occurred when digging on the construction site bumped into an aquifer that now requires the Casino to pump groundwater from its subterranean parking garage 24 hours a day, the report said.