Las Vegas Real Estate Investment - Park Heights Cornerstone Redevelopment in Henderson

June:  Thanks! GSG has a few local developments in their portfolio. As I recall, somewhere around $800 million and climbing. The Park at Northpointe, The Park at Spanish Ridge and Spanish Ridge II, Patrick Professional Park, The Park at San Martin and The Park at Warm Springs. They aren't exactly a pump & dump outfit like so many that have come....and gone. Sullivan Square is in litigation, with GSG claiming that their 100% financing partner and majority owner, Harcourt Developments, stopped paying the bills to oust them from the project.  

I think the real issues with Park Heights will be the development agreement expenses and exactly what they'll get approved to build, and if that all pencils out well enough to attract the financing. A mixed use bordering on 100 acre city park and lake view, with beltway access, should draw some attention, especially if the numbers are right.

Bruce: Interesting rant...but I'd like to respond with a couple of points.  

I mentioned this is the 3rd. developer making an attempt for this former industrial property, or this portion of it. It's not unusual for these redevelopments, or sometimes a building, to go through a variety before one has a plan that sticks. Union Park in downtown is a perfect example.

Lake Las Vegas isn't in receivership, it's in Chapter 11 reorganization. They are restructuring debt that allowed them to gain post bankruptcy court approval for additional loans of $127 million to maintain operations and maintenance. Many participating in this funding are creditors of the original loans. The default caused from builders not picking up their options on the improved parcels, due to the national housing crisis. New home builders across the country are facing challenges as there are an abundance of foreclosures on the market. The good news is pricing is much more affordable, speculators had been causing some unrealistic numbers.  

I think if you go back and look at my post, building height is what the Henderson planning commission is concerned about, and why they requested GSG to return with more details before any waivers are issued. I believe they have continued their first scheduled meeting, so there hasn't been any decision on it that I'm aware of. I think that in the current financial situation and what I'm assuming will be true for the near future... if this project does get the needed approvals, lending guidelines themselves will be fairly strict. I don't think they'll want any repeat performances of the current financing mess, so everything will have to pencil out.  

There haven't been any condo prices mentioned that I know of, but comparing City Center's estimated $11.2 bil project to this one estimated at $1 billion is like apples and oranges. I would have to assume at this point there would be somewhat of a price range difference between the two. There are a little over 1700 residential units proposed in the current design and only some in a smaller building to be considered 'luxury'. Even though valley in-migration is said to have dropped to 5,000 - 5,500 per month during this current slowdown, not exactly a difficult number to absorb if just that rate continues, sales depending more on that unknown price.  

It's my understanding that any water intake issues are from lowering lake levels. A third lower intake is under construction by the Southern NV Water Authority, so that if the drought were to continue and lake levels to fall further, there would be adequate supply from lower levels of cooler and even cleaner water. 96% of the water from Lake Mead is sent past the dam to supply in CA & AZ. Fortunately last year they signed an agreement that allowed those states to bank water in the lake instead of the forced releases. That had offset some of the low level estimates for this year. Interestingly enough, Forbes had placed Las Vegas valley water quality in the top 10 of US Best Cities for Clean Drinking Water, at #7.  

Echelon did fall victim to the financial crunch. It's partners Morgan Hotels and hadn't secured their financing and General Growth Properties unable to sign retail tenants because of it. Unfortunately there have been a number of similar construction halts across the country. Coyote Valley tribal casino in Mendocino, CA and Museum Plaza in Louisville, KY are just a couple off the top of my head that had similar bad timing. Boyd has said it hopes to resume construction next year if the financial markets return to something favorable, and Morgan has since signed an amended agreement to complete their joint venture that runs through December 2009. At this point delayed, not dead yet. I'd also add the Cosmopolitan was spared the same fate even though it's financing had fallen apart and defaulted on it's initial construction loans.  

So as I mention in my comment above, I think this development will depend on what they are permitted to build and if they can make those numbers work. This is in the preliminary stages and a few years out if it does take shape, but it doesn't appear at the moment there's much in speculative financing anytime soon. It is good to see those that believe in the future growth of the Las Vegas Valley, even in these difficult economic times.