Mortgage financing in Las Vegas has been hard to come by in recent months. Single-family home underwriting criteria is tough enough as it is and condominiums are treated with even harder scrutiny. And then there are luxury condo-hotels that standard mortgage lenders don't want to touch today with any length pole. The latter were the darlings of the Southern Nevada condominium developers in the middle of the last decade when they couldn't build them fast enough to meet seemingly insatiable demand. That was then. How quickly real estate markets can reverse themselves is purely extraterrestrial.
Despite the obvious mortgage freeze on high-rise condo-hotels in Las Vegas, the Trump International has managed to secure $190 million from Hypo Real Estate Holdings AG, a German firm, according to Donald Trump. It's going to help him pay down underlying mortgages on the project and avoid a possible bankruptcy. After all, from the 1,282 units in the golden tower only 302 had been sold by the end of February, asserts SalesTraq, so the bottom line is hurting badly.
A large share of the luxury condos at Trump International has been sold but finding mortgage money to close the transactions has been the problem. Perhaps the $190 million could be put aside to provide financing for the time being, until the home loan market thaws. The details of the arrangement are unclear - besides what Trump himself announced - but it's conceivable that at least some of it could be used to expedite sales.
Las Vegas mortgage and housing observers were somewhat surprised that someone would lend money at this stage to a depressed condo market. Either Hypo Real Estate knows something that they don't, or then it's taking an above average risk with its funds. Or it feels to be strong enough right now to take a long-range view and can afford to wait until the situation returns to normal. Which it will eventually do. One day Trump International will be one of the premier high-rise condo destinations in Las Vegas.
As Hypo Real Estate dips its toe in the water, other mortgage lenders undoubtedly are keenly watching. Everybody wants to be in the front end of a turnaround and this development has at least got them talking. It's a small vote of confidence for the Las Vegas condominium segment, and for really the entire housing market here, and could be the stepping stone from which to move on to bigger and better things.
Photo by jimg944
Comments (9)Subscribe to CommentsComment