Chapter 11 Filing Buys Time for $2B Las Vegas-Area Project

Even in the fast-growing Las Vegas market, the capital crunch continues to catch up with some developers. The entity building City Crossing, a 125-acre, $2 billion mixed-use project two miles south of Las Vegas in Henderson, Nev., filed for Chapter 11 bankruptcy protection this month. The move is intended to buy time for Plise Development & Construction, the project’s developer, to refinance $180 million in debt, according to a report by Tony Illia this week in the Las Vegas Business Press. Plise COO Mitchell Stipp told the Business Press that the firm has been unable to reach terms with Community Bank of Nevada to refinance about $30 million. As a result, City Crossing L.L.C., controlled by Plise, had to file for bankruptcy protection.Last fall, Plise detailed plans for 1 million square feet of Class A office space and another 1 million square feet of retail, restaurants and entertainment. Two boutique hotels and 2,500 high-end residential units round would round out the project. At that time, the partners had revealed plans to wrap the project’s first two phases by third quarter 2009 and complete development by 2015. Stipp told the Business Press that Plise has enough cash to move ahead on the project and expects to refinance its debt in a few months. Local sources told CPN today that they expect Plise to continue the project, even if there are delays or other changes.City Crossing joins the ranks of developers in Las Vegas recently touched by the credit crunch. Only two weeks ago, the joint venture behind a planned $4 billion project planned on a 27-acre Las Vegas Strip site pulled the plug. A joint venture of Crown Ltd., York Capital Management and IDM Properties explained in a statement that “recent upheavals in world credit markets” were to blame for the project’s demise. “I think we’re going to have more successful projects but I think we also have a number of projects that don’t proceed or are stalled,” said Craig Shute, managing director of CB Richard Ellis Inc.’s Las Vegas regional office. But Shute, whose office is handling leasing for the retail portion of City Crossing, hastened to add that upwards of $30 billion worth of projects are under construction on the Las Vegas Strip alone, to say nothing of development plans for fast-growing nearby communities like Henderson. That growth, driven largely by the gaming and resort industry, bodes well for the market’s long-term prospects, he argued.Illustrating Shute’s point, Plise is only one of many developers in the Las Vegas market moving ahead with big plans. Earlier this month Morgans Hotel Group disclosed that it has secured financing for its $760 million expansion of the Hard Rock Hotel & Casino in Las Vegas. And in May, Taubman Centers Inc. offered a preview of the planned 1 million-square-foot retail component of M Resort in Henderson, a $1 billion mixed-use project being developed by Anthony Marnell III in partnership with MGM Grand.Blog Story and Comments