Las Vegas Condos - Las Vegas Condominiums » las vegas strip

CityCenter cuts condo prices

admin — Fri, 07 Aug 2009 20:03:08 +0000

Earlier this year CityCenter was facing a revolt from its contract buyers demanding price reductions on their units. A small group of buyers went so far as to obtain an attorney to try to get out of their contracts because the contract price was no longer fair. Now, since when is anything in life fair? I hardly doubt that these same buyers would have been happy had prices gone in the other direction and CityCenter then demanded they pay more money for the units they had already agreed to buy at a set price. Of course since the market has fallen steeply, the units are now dramatically overpriced.

MGM Mirage chief executive agreed stating “There’s no debate that the market has fallen dramatically in pricing since we initially priced these units.”

However, I absolutely agree with the contract buyers that they should had have their prices reduced to current market value, but because it makes good business sense on several levels. The foremost reason being there isn’t a bank in the country that will finance them at the prices they were originally purchased at. Another reason is because of who the buyers are. Several high end buyers frequent the MGM Mirage properties and are on their special clients list.

MGM Mirage came to the same conclusion earlier this month and has agreed to work with these buyers and the banks to get the units closed. The company has also stated that they are working with their customers and banks to get clients into their contracted units. It seems that MGM Mirage has finally seen the writing on the wall. The project is scheduled to open by the end of the year.

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Early Buyers Cry Foul at CityCenter

admin — Fri, 10 Jul 2009 06:44:03 +0000

Recently a lot of local and national press have been focused on a small group of buyers at CityCenter. Some early condo buyers are demanding significant price reductions….despite signing a contract. Now, I’m not taking sides. I had agreed to buy a property, sight unseen, years before it would be completed and then as it neared completion the market had dropped significantly, I wouldn’t be happy either.

Somehow, I don’t think the same buyers would have thought it was fair if the market had shot up and CityCenter demanded more money. As almost everyone in the country has found out of the last few years, there is no guarantee in the real estate market that the value will always go up. Mark Connot, a partner with Hutchinson & Steffen whose firm is representing a few CityCenter buyers had this to say:

It is simply not possible by any stretch of the imagination to close on the units at the contracted price.

I’m not a lawyer, but when you sign a contract it is binding…unless there are special circumstances. MGM Mirage has stated that they are not going to reduce prices for buyer in contract at this time. However, legal and morals aside, Mark is absolutely correct. These units will need to be appraised if the buyers are not paying cash. Given the current state of the market, I think buyers will find a hard time finding the necessary financing to complete their contract. Plus most contracts include an out clause if the buyer can not secure financing. Whether the CityCenter contracts have that loophole, time will tell.

In the end, I think MGM Mirage will be forced by market conditions to make some kind of adjustments to get the units closed. Of course, this episode is just the latest of the troubles that have plagued the project. So given the market, do you think early buyers are entitled to massive price reduction?

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Fontainebleau Woes Continue

admin — Wed, 24 Jun 2009 02:12:48 +0000

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.

Condos Battling it Out

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CityCenter Seeking Additional Financing

admin — Tue, 24 Feb 2009 02:35:54 +0000

This seems to be a recurring theme for hotel and condominium projects in Las Vegas (and elsewhere, I’m sure): Trouble getting financing. “Necessity is the mother of strange bedfellows” That certainly applies here, since MGM Mirage is in talks with Deutsche bank who happens to own the adjacent property next to CityCenter, the Cosmopolitan. In another twist of the coincidence, Deutsche Bank is looking for someone to operate the Cosmo once it is finished. It’s estimated that MGM Mirage will need another billion dollars to finish the project, which is scheduled to open in October of this year. This is the latest problem to plague CityCenter (see my prior post, CityCenter losses some condos).

The rumor is Deutsche Bank would provide MGM Mirage with the additional funds they need for CityCenter. MGM Mirage would then either run the Cosmopolitan for them or the bank would trade the Cosmopolitan for a stake in CityCenter. Either way, it seems like a good deal for both parties if its true.

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