BluefoxToday blog : MGM Mirage's CityCenter loan talks dissolve

MGM Mirage's CityCenter loan talks dissolve

The credit markets everywhere are in a pretty bad shape and the CityCenter project going up on the Strip is acutely feeling the pain. Apparently the negotiations between MGM Mirage and its partner Dubai World on one side of the table and Deutsche Bank on the other over a loan arrangement have collapsed.

The German bank was willing to lend around $1.2 billion to enable the project to complete against equity and debt shares in it, but the two sides failed to reach an agreement. The Cosmopolitan resort being constructed next door to the CityCenter and now owned by Deutsche Bank was part of the talks, evidently in a role that MGM Mirage would either become a part owner or at least manage it, and take it off the hands of the bank that doesn't have a gaming license. The prominent Las Vegas casino operator is now in talks with other parties in an effort to secure the needed financing.

CityCenter is scheduled to open later this year. Time seems to be running out on finding the funds for a full completion. One component in the massive development, the Harmon, was already postponed until late 2010, and its 200 condominiums were scrapped altogether due to poor sales. The tight mortgage market especially for condo financing in Las Vegas is a major obstacle.  

What can also happen is that one or more of the remaining towers with condominiums, the Veer, Vdara and Mandarin Oriental Las Vegas, will be delayed for obvious reasons. The exteriors probably would be finished but not much else until market conditions improve.  Should this take place, it would actually help reduce Southern Nevada's high condo inventory and bring the supply-demand equation at least somewhat closer to a balance. That's what the marketplace is striving to do now and is having a hard time getting there because new foreclosure filings seemingly continue unabated.  

It would be nice to see the CityCenter completed as planned, yet market conditions as far as one can tell might dictate otherwise.

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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 6 commentsEsko Kiuru • March 05 2009 05:32PM

Comments

I smell some opportunities coming in the next year for you.  That is a gold mine that will need to be tapped in time........

Posted by TIM MONCRIEF, Over 2,000 homes sold….. (Keller Williams Realty) over 9 years ago

Esko, not good news, but it seems to just be a set back.  It does not seem like they have given up, and hopefully they will find the funding they need.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 9 years ago

Tim,

The opportunities will be aplenty, you're right.

Posted by Esko Kiuru over 9 years ago

George,

If the funding doesn't materialize soon, they'll just open the mega resort partially.

Posted by Esko Kiuru over 9 years ago

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Dear Concerned City Center Investor,

My law firm, Lurie & Park LLP, practices in real estate litigation and is aware of investors’ growing concerns regarding delays in construction at the City Center, owned by MGM Mirage, and how it affects their investments.

It is clear that the developer has delayed construction. Because the developer is still struggling to acquire financing, this can lead to further delays, which can potentially span a number of years. The attorneys at my firm believe that there is a strong case that the developer is legally required to refund the deposits.

We hope to form a plaintiffs group to share in the costs of possible arbitration. The more buyers we represent, the more each saves in legal costs (e.g. 5 clients = 20% of legal costs for each client). If you are interested in joining the group, please contact me.

Dane Harrison Taylor


Case Manager


Lurie & Park LLP
(310) 207-9400

<!--EndFragment-->

Posted by dht84657 over 9 years ago

I have a Cosmo unit. what are you doing with these?

Posted by derek marlowe almost 9 years ago

Participate