Bankruptcy Court Approves $127M Financing for Lake Las Vegas Developer
- Aug 06, 2008
The court handling the bankruptcy of Las Vegas Joint Venture L.L.C., the master developer of the Lake Las Vegas Resort, has approved a $127 million debtor-in-possession financing agreement with a group of lenders led by Credit Suisse as agent. The consensual agreement was reached with various creditors and the Official Committee of Unsecured Creditors. A Lake Las Vegas spokesperson characterized the credit facility as “cash to run the operation.” CPN reported two weeks ago that the project (pictured), a 3,600-acre master-planned residential and resort community next to Lake Mead National Recreational Area and 20 miles east of Downtown Las Vegas, had filed Chapter 11. The developer, headed by president & CEO Frederick Chin, cited poor liquidity, substantial debt service, extremely challenging real estate market conditions and other legal and financial issues as causes of the bankruptcy. Las Vegas-based Atalon Group, a firm that specializes in turning around financially troubled companies, took over the project earlier this year after its original developer, Transcontinental Corp., defaulted on a $540 million loan provided by an investment group led by Credit Suisse, Sandi Sternberg of Sitrick and Co. told CPN.Lake Las Vegas includes a 320-acre man-made lake, three golf courses and more than 1,600 completed residential units. A number of businesses operating on the property, including three hotels (The Ritz-Carlton, The Loews Lake Las Vegas Resort and the MonteLago Village Resort) and the Casino MonteLago and the MonteLago Village shops and restaurants, are not included in the Chapter 11 filing. In another high-profile sign of the difficulties Las Vegas is going through, CPN reported last Friday that Morgans Hotel Group is declining to stay in its joint venture with Boyd Gaming Corp., under which it was to build two hotels at Boyd’s $4.8 billion Echelon resort on the Las Vegas Strip. The project, which appears to be on indefinite hold, was to include two entertainment venues totaling 6,000 seats. Shelli Lowe, managing partner of the Integra Realty Resources office in Las Vegas, told CPN that the Las Vegas economy is in as bad a shape as she has seen in more than 30 years as a commercial appraiser. “Never has it been like this,” she said Casino business is down, local unemployment is 6.4 percent, airlines are cutting back on flights to Las Vegas, and there’s a three-and-a-half-year supply of homes in the local Multiple Listing Service. In addition, Lowe said, the office vacancy rate is 16 percent, and that’s being driven in significant part by the contraction of Las Vegas area real estate, title, mortgage and construction companies. Lowe also pointed out that, on a base of about 130,000 hotel rooms in metro Las Vegas, another 30,000 are currently under construction.