BluefoxToday blog : Cosmopolitan on the Strip also struggling

Cosmopolitan on the Strip also struggling

This week has really been up and down in the Las Vegas condominium market. Earlier Sinifox Financial reported how well the MGM Mirage's CityCenter condos were accepted by the luxury home buyer. A few days later the news turned sour as an item surfaced about a downtown condominium project called Newport Lofts being taken over by its lead bank. And now there is another case of premature lender involvement.

Cosmopolitan, a $3 billion condo and hotel project wedged between the Bellagio and CityCenter, was served a notice of default by Deutsche Bank when payments on a $760 million construction loan were missed. The developer, 3700 Associates LLC, has already sent out a management team to scout the financial landscape for a potential equity partner that would ultimately lead to another loan. However, in today's soft residential real estate market and tough mortgage environment it can become a major challenge.

But then Deutsche Bank obviously had a change of heart and worked out a temporary arrangement with Perini Building Co. to continue construction on the project toward its estimated December 2009 opening. In the meantime 3700 Associates and the banks are discussing new financing options and availabilities.

This may be the best alternative for Deutsche Bank. If it pulled out of the project altogether, it would likely lose all of its to-this-point investment in it. Should a new lender emerge in the coming weeks, so much the better. Or it could let Perini finish everything as scheduled and then seek a buyer for the project. The real estate market in Las Vegas and the national mortgage conditions in late 2009 and beyond could be much improved and actually allow the bank to break even or even make a decent profit.

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Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 8 commentsEsko Kiuru • January 19 2008 09:41PM

Comments

This in my opinion is just another indication we are far from the end of this downturn.
Posted by Adam Brett, The Adam and Eric Group, Fullerton's Finest (The Adam and Eric Group) over 10 years ago

Adam,

Vegas condo market is very competitive right now, so it's going to remain soft for a while.

Posted by Esko Kiuru over 10 years ago
Esko, we have close friends who do a lot of work in Las Vegas high end market.    I'll have to give them a call.
Posted by Kate Bourland, Onlilne Marketing Mobile Marketing (Marketing with Kate) over 10 years ago

Kate,

Thanks for coming by and looking forward to assisting your friends with their Las Vegas endeavors.

Posted by Esko Kiuru over 10 years ago
I'm glad to hear that things are picking up in Vegas.  Here in the Coachella Valley there is some movement, but it's not raining like it once was.  Good luck in Vegas!
Posted by Andrew Wardwell Franklin Loan Center Palm Desert, CA over 10 years ago

Andrew,

The market is still rather unpredictable.

Posted by Esko Kiuru over 10 years ago
Are there any developers not working with Realtors?  I'm looking to get in touch with them for closeout deals. 
Posted by Mike over 10 years ago

Mike,

The developers will work with anyone who has the means to buy. Call them directly.

Posted by Esko Kiuru over 10 years ago

Participate