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.