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Cosmopolitan Condo Class Action

April 12, 2010 By

The Cosmopolitan of Las Vegas has not had a happy journey, and the class action suit that has been settled in April 2010 is just the latest sign that it may yet live up to the potential of its prime location. The plaintiffs in the Cosmopolitan Class Action had signed up to buy some of the development’s 1,495 condo-hotel units, but are now getting 62% of their deposits repaid in recognition of the project’s delays.

Watching closely are 150 buyers of City Center units who are not happy with the way their transactions have played out. It is said that MGM Mirage has offered 25% of deposits, which falls some way short of Cosmo, however, the issues are quite different for each development.

So far City Center sales have been slow with 31 of the 1,495 Vdara units sold (prices from $370K to $871K) and 24 of the 225 Mandarin Units ($1.05m to $7m).

Of course, the real reason that depositors are up in arms is that values have plummeted since they put their money down. Union Gaming Group estimates that recently built mid-rise and high-rise condos are down 58% from their market peak, with condo-hotels down 71%. Union Gaming’s report, ‘Las Vegas High-Rise Blues II: From bad to worse’ studied 26 residential towers in Las Vegas and noted:

  • There is a current inventory of nearly 8,700 units (pre CityCenter), which includes all relevant projects in the resort corridor, downtown, the south Strip and the suburbs.
  • Of the residential towers, 20 are condos (pure residential) while the remaining six are condo-hotel.
  • Of the current inventory the number of “available” units that need to clear the market is alarming. This does not include currently owned units that are actively listed on the MLS system or what we believe could be a large number of owners who would prefer to sell but simply won’t given current market dynamics.
  • Union Gaming assumed that all units in default will ultimately become available. Of the 4,819 condo units it looked at, 49% are available or soon-to-be available. This includes unsold inventory (38% still held by the developer), units in default (10%) and bank-owned (2%).
  • Of the 3,863 condo-hotel units, 44% are available: unsold (33%), in default (10%), bank-owned (1%).
  • On a combined basis, 36% are unsold, 10% are in default and 1% are bank-owned.
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$12.5bn of Appraised Value Wiped Out

April 12, 2010 By

The Clark County assessor’s office published a list of the 25 largest taxpayers in Clark County, and it showed that in 2010 these properties have lost $12.5 billion in appraised value. Las Vegas real estate taxes are down. The total appraised value of $41.2 billion includes land and buildings, and is a 23% decline on the $53.7 billion value of last April. These declines in commercial real estate follow the collapse in residential values.

Despite the decline in appraised values local governments are not going to see a decline in values. This is because the taxes on commercial properties were capped at an annual 8% rise back in 2005. Values haven’t dropped so far that the post-2005 taxable base has been eroded. As a result of this legislation newer owners are paying a disproportionately higher amount of tax than those that had large portfolios pre-2005.

  1. MGM Mirage
  2. Harrah’s Entertainment
  3. NV Energy
  4. Las Vegas Sands Corp.
  5. Boyd Gaming
  6. Wynn Resorts
  7. General Growth Properties
  8. Station Casinos
  9. Universal Health Care
  10. Basic Management
  11. World Market Center
  12. McCarran Center
  13. Camden Property Trust
  14. Olympia Group
  15. Greenspun Companies
  16. Treasure Island Ltd.
  17. Harsch Investment Properties
  18. Marnell Corrao Associates
  19. Nevada Property
  20. Hospital Corporation of America
  21. Gaughan South Limited
  22. Olen Properties
  23. Wal-Mart
  24. Goldman Sachs Group
  25. Crescent Real Estate Equities

The MGM Mirage figures are skewed by a couple of factors: the sale of Treasure Island, and City Center coming online. Putting these two factors together MGM’s appraised value of $16.3 billion is a 4 percent increase on 2009’s $15.7 billion. The assessed value, on which taxes are applied, is $5.5 billion. Harrah’s Entertainment also has a significant change – it acquired Planet Hollywood – but despite this its appraised value of $5 billion was still below its $7.3 billion of a year ago.

Some companies have dropped off the Top 25 Las Vegas Real Estate Taxes list altogether. Turnberry Associates were ranked No.10 in 2009, but having lost Fontainebleau Las Vegas have seen its appraised value fall to $257 million. Other disappearing acts include Focus Property Group, Trump International and Triple Five Development.

http://www.lvre.com/summerlin-homes-for-sale/

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Cosmopolitan to Open December

April 8, 2010 By

After announcing that the Cosmopolitan has now been renamed the Cosmopolitan of Las Vegas it has set December 2010 as its opening date. The mid-December opening will not include around one third of the hotel’s rooms as these will be held back until July 2011.

Critics of the development say that it is another faceless steel tower better suited to New York than Las Vegas. Proponents point to the increasing sophistication of Las Vegas, and note that Cosmo’s high-rise terraces overlooking the Bellagio fountains are a unique asset.

Owners Deutsche Bank will be hoping that the project manages to distinguish itself from its neighbour City Center. Many tourists mistake Cosmopolitan as being part of City Center, but from December it will have an opportunity to show that its 50-story towers, 2,995 hotel rooms and condos, 100,000-square foot casino, and 50,000 square foot spa and fitness center are something special.

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Is the Cosmo Getting Closer?

March 21, 2010 By

Las Vegas’s mixed-use development the Cosmopolitan has now been renamed Cosmopolitan of Las Vegas after reaching a settlement with Cosmo magazine (holders of trademark rights to the Cosmopolitan name since 1957).  It could change its name again though as the owners Deutsche Bank are said to be shopping around the property for sale, or operational partnership. Maybe the Cosmpolitan Hilton will  be the next moniker for this stalled project.

Hearst Corporation, owners of Cosmopolitan magazine, had sued Cosmopolitan of Las Vegas owner Deutsche Bank in June 2008 over the use of the name. They were seeking a $500,000 pay day and a percentage of future profits. The details of the settlement were not revealed. This is just the latest problem to be overcome by the project which was bought by Deutsche Bank at a $1 billion price tage when New York-based Bruce Eichner’s company, 3700 Associates LLC, didn’t have the steam to complete the development. Some people have had deposits down on condos for as long as five years, but this could be a development that is worth the wait. Features include:

  • A location in the heart of the Strip with two 50-story towers with some incredible views
  • There will be a total of 2,995 hotel rooms and condos. These are notable for the terraces that they have, some overlooking the Bellagio fountains. High rise terraces on the strip are rare
  • Three swimming pools said to be different from anything else on the Strip. In a city of hyperbole we will have to wait and see
  • A wide range of gourmet dining is promised
  • A 100,000-square foot casino. Apparently there are also going to be Casino Cabanas – sounds like a scene out of Hootersa
  • A 50,000 square foot spa and fitness center
  • A state-of-the-art convention center

With the latest court case behind it we are one step closer to seeing the Cosmopolitan reach its potential to be the destination at the heart of the Strip. Of course it has to compete with City Center, but with its terraces these condos should give MGM a run for its money. The Cosmpolitan of Las Vegas is set to be more than just another Strip condo.

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