Las Vegas Casino Project Facing Foreclosure

Las Vegas Foreclosure & Real Estate News

By RYAN NAKASHIMA

LAS VEGAS -

Nevada's foreclosure crisis claimed a high-profile victim on Wednesday as investment bank Deutsche Bank filed a notice of foreclosure on the $3 billion Cosmopolitan Resort & Casino project for a construction loan of $760 million that just matured.

Developer and owner Ian Bruce Eichner said his company, 3700 Associates LLC, was working with Deutsche Bank and Merrill Lynch to find new investors.

"This action by our lender comes as no surprise," Eichner said in a statement sent to The Associated Press. "With the current challenges within the real estate and debt capital markets, which are out of our control ... we both anticipated and planned for this."

Eichner said his company is having talks with several groups of potential investors.

A Deutsche Bank spokesman did not immediately return a message seeking comment.

The 2,998-room high-rise casino and hotel under construction is due to open in late 2009 between the Bellagio casino resort and the CityCenter casino complex on the Las Vegas Strip.

Many of the units were condo-hotel rooms, which allow buyers to rent out the residences to hotel guests and split a fee with the resort management.

That led some observers to speculate that the project may have suffered from the weakening condo market.

Some 20,000 planned condo units have been cancelled or suspended in the last four years in the Las Vegas area, said Brian Gordon, a principal of Las Vegas-based research firm Applied Analysis.

Sales of condo units and townhomes also plummeted in December, down 55 percent from a year earlier to 167 units, according to the Greater Las Vegas Association of Realtors.

"The state of the luxury condominium market is somewhat challenging," Gordon said. "The question remains: Is this a project-specific issue or is it a market issue?"

MGM Mirage Inc. said Tuesday that condo sales at its CityCenter project next door were strong. It said it sold half of its 2,647 condominium units for $1.63 billion, with two years before its planned opening in late 2009.

Panorama Towers, a luxury offering just west of the Strip is also selling well, said developer Laurence Hallier. The third Panorama tower is to open in September, and $900 million in units have been sold so far.

"It's not the market that it was a year and a half ago, but I think for really good product in the best location, I believe there's ample market," Hallier said.

 

Article Source http://www.forbes.com/feeds/ap/2008/01/16/ap4540638.html