by admin on June 23, 2009
It has been a very rocky road for Turnberry Associate’s latest project Fontainebleau. Earlier this year it was in an enviable position having secured 100% of its financing prior to construction. However, despite the best planning the project was forced to file Ch. 11 bankruptcy earlier this month. The project ran out of money after the final-stage lenders withheld $675 million in revolver financing in March, citing an unspecific breach of loan covenants. Fontainebleau denies breaching any loan covenants in the lawsuit. Construction on the project has slowed to a halt, with the majority of the workforce laid off.
However it is not all bad news for the future of the project. A short time ago the bankruptcy court approved several of Fontainebleau’s first-day motions, providing partial access to $201 million in cash as well as payment of back wages. Fontainebleau has also asked for an expedited hearing on the matter.
But that’s not all. An unnamed lender has stepped forward to provide enough financing to finish the project if the banks involved will unfreeze current loans. The bankruptcy judge Jay Cristol hearing the case is urging all parties involved to try to work a compromise.
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by admin on June 10, 2009
The courts have been kept quite busy since the real estate bubble burst. If you surf the web, it seems that everyone was predicting that the housing market crash. One of the things that people tend to forget is that there is no guarantee that any property you buy will go up in value.
Right now there is a condo developer being sued because the project failed. The developer, Terry Bean of Oregon bought an apartment complex with the intent of converting it into condos three years ago. At the time, he paid $35 million for it which would be right around the time the market peaked. Two Portland investors, Frank Dulcich and Richard Akerman claim that [click to continue…]
One thing is for certain, the courts have been kept busy by developers. In an interesting turn, the owners of Fontainebleau are accusing their lender, Deutsche Bank of trying to destroy their project in order to protect their own condo project.
Deutsche Bank, along with several other lenders were named in a lawsuit claiming that they violated financial obligations when they canceled an $800 million revolving credit facility needed to complete construction on the Fontainebleau resort.
Fontainebleau filed a suit last month, stating that they are not in default and accused the banks of trying to get out of their financial commitments (the loan was canceled on the grounds that the project had defaulted on unspecified loan requirements).
Deutsche Bank is also developing the Cosmopolitan resort on the strip after buying the property for a Billion dollars after it went into foreclosure. The amendment filed by the Fontainebleau alleges that Deutsche Bank is trying to minimize the competition with their project.
Meanwhile Irish based Harcourt Developments has filed a counter claim against Glen, Smith Glen Development, its principals and one of their spouses for fraud. Harcourt was an equity partner in the stalled Sullivan Square condo project. Harcourt is claiming that Glen, Smith Glen Development tried to induce them to fund construction of the project based on straw man condo sales.
Earlier this year, some of the original charges filed against Harcourt were dismissed. It seems that Sullivan Square will join the ranks of other Las Vegas dream projects.
Over the past 18 months, several high rise projects have gone back to the banks financing them. Newport Lofts, the Cosmopolitan, Turnberry Towers and Mira Villa have all been taken over by the banks due to bankruptcy. Two more projects can be added to that list, Streamline Tower in downtown Las Vegas filed for Chapter 11 bankruptcy protection this past Wednesday and One Las Vegas has officially been taken over by the lender, Corus Bank of Chicago. Corus Bank also financed $125 million for Streamline Tower.
Only 10% of Streamline’s 275 units are sold. The rest are being actively sold as the reorganization plan works through the courts.
While bad news for the initial investors, this is great news for Las Vegas high rise condo buyers. One Las Vegas condos are being offered by Corus at approximately half of what they sold for new. Other projects have felt the pinch of buyers dropping out of escrow. Last month the Allure had an auction to sell 10 condos that fell out of escrow. They wouldn’t release the specific results of the auction, other than [click to continue…]
by admin on April 30, 2009
The drama surrounding project CityCenter has finally come to an end. For the past several months the future of CityCenter was up in the air due to financing issues. Their partner, Dubai World had gotten into a disagreement about the project and MGM Mirage was forced to cover the additional payments. Things came to a head when Dubai World filed suit against MGM Mirage over the project.
Now all those issues are just water under the bridge. According to sources late Wednesday night MGM Mirage and Dubai World reached an agreement. There is a new revised partnership agreement has resolved the issues between Dubai World and MGM Mirage. Dubai World will reimburse MGM Mirage for the equity payments it was forced to make to lenders on behalf of the partnership during the litigation. Dubai World and MGM Mirage will fund the remaining $800 million in equity contributions to CityCenter through letters of credit. The project is still on schedule to open in phases starting later this year. Roughly half of the high rise condos in CityCenter have been sold to date.
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by admin on April 20, 2009
It seem that project CityCenter has been plagued by problems. Several construction deaths and costly mistakes and now the problem with Dubai World not honoring its financial commitments could spell the end for the project….at least as far as MGM Mirage is concerned. However, according to Reuters, investor Carl Icahn and private equity fund Oaktree Capital Management have stepped up and acquired hundreds of millions of MGM Mirage bonds. The deal will be a restructuring swapping debt for equity, done in concert with MGM’s majority shareholder Kirk Kerkorian to provide the additional funds needed by MGM Mirage. The deal still has to be approved by the lenders, but MGM Mirage has a very strong relationship with them going back several years.
MGM Mirage will be cutting it close. Some of their financial covenants are due to expire on April 29 and May 15. Should those defaults come about, MGM Mirage would be forced to file for Ch. 11 bankruptcy protection.
If this deal doesn’t go through, MGM Mirage may sell off other assets like the Beau Rivage in Mississippi or the MGM GRand in Detroit. MGM executives are firmly committed to completing CityCenter which is scheduled to open in October of this year. When completed, it will be the biggest LEED project in the state.
by admin on April 17, 2009
Las Vegas has always been a town about long odds since its conception. That fact still holds true today, especially with the decline in tourism. In 2008 several smaller home builder went bankrupt, halting projects all over the Las Vegas valley. Westmark Homes, the developer of Mira Villa stopped construction on phase of the project in early 2008 after filing bankruptcy.
Now despite the soft condo market, three banks are coming up with the $37 million in financing to finish the first phase of the development. The phase will have 113 condos and the sales office will be open in June of this year.
Part of the sales strategy will [click to continue…]
by admin on April 14, 2009
The bankrupt luxury loft project Vantage Lofts by Slade Development is now for sale. The $37.5 million of outstanding principal on the loan held by investment bank George Smith Partners, is in an advanced stage of default. The bankruptcy court has now approved the sale of the partial complete property. The lender is selling the note rather than foreclosing.
At the time construction had halted, three buildings were under construction. The first two buildings were 90% completed, housing 80 lofts. All that needed to be done were the finishes and some landscaping. The third building is roughly 50% complete. The sale has split the project into two parcels. The southern parcel contains the partially completed buildings.
Vantage Lofts is located in the upper valley of Henderson [click to continue…]
by admin on April 11, 2009
With the downturn of the economy, MGM Mirage has been putting on a brave front regarding CityCenter. Months ago a “construction defect” caused them to scrap the Harmon condos…..sure it did. I’m sure there were some savings in construction costs that were purely incidental. Earlier they were in talks with Deutsche Bank about providing some additional financing for CityCenter.
Then there were rumors of talks with Australian gambling company Crown Ltd, who recently bought the Cannery on Boulder Highway. Earlier this week, investment discussions between Colony Capital LLC a real estate private equity firm [click to continue…]
by admin on April 10, 2009
Sullivan Square started out as an unknown project several years ago. The developers started putting out television ads, very artsy targeting the upper middle class. One of its selling points was that the entire community was going to be green and thus eligible for special tax breaks as well as being great for the environment. Last summer the Sullivan Square developer filed suit against its equity partner in the deal, Harcourt Developments, a private company from Dublin, Ireland. The suit was over some $800 million in financing for project.
The case ended up in the Eighth Judicial District Court of Judge Mark Denton. Earlier Judge Denton granted the defendants’ motion to dismiss for lack of jurisdiction on behalf of the individual Irish defendants, along with several of the causes of action in the plaintiff’s first amended complaint (Judge Denton threw out most of the original complaint in December of last year on a technicality). Allegations of conspiracy, negligence, intentional interference and consumer fraud were also dismissed with prejudice. [click to continue…]
