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Gaming Guru

Hubble Smith
 

New York investment firm buying 427 CityCenter condos for $119 million

26 December 2012

LAS VEGAS -- MGM Resorts International has announced the bulk sale of 427 condo units at Veer Towers, the twin residential towers at CityCenter, for $119 million, or about $279,000 per unit.

It comes at a time when Las Vegas is seeing sustained improvement in the housing market and affirms the "superior quality and premium value" of 67-acre CityCenter, said Tony Dennis, executive vice president of CityCenter Residential.

"This is new money coming into a marketplace that hasn't seen a lot of investment," he said. "Even though it's a cyclical thing and it's taken us a little longer to come back, this is an affirmation of the current market in general and an indication that things will get better from here."

The buyer is LVT Owner LLC, an entity of New York investment fim Ladder Capital Finance.

The firm will likely hold the units as rentals and put them back on the market as resales in a few years, Dennis said. It'll probably take three to four years to sell 400 units at retail prices, he said.

The bulk sale leaves 11 penthouses in Veer's inventory, which CityCenter Residential intends to sell. With limited inventory remaining at Veer Towers, CityCenter Residential will shift its focus to marketing residences at Mandarin Oriental.

"We're going to turn our attention fully to Mandarin, our flagship property," Dennis said. "We've been holding those condos for three years. We're coming back on the market now that signals are much more positive."

The 37-story Veer Towers, designed by Murphy Jahn architectural firm, are inclined at 5-degree angles to create a glass shimmer both day and night. Each tower features 335 residences ranging from 500-square-foot studios to 3,300-square-foot penthouses.

It's the third major bulk sale of condo-hotel units in Las Vegas this year. In September, Trump International sold 300 units to Hilton Grand Vacations for about $100 million.

"Las Vegas is coming back in a big way," Eric Trump, son of Donald Trump. told the Review-Journal at the time. "I see increased traffic at the airport, in security lines and in terms of the number of sales of condo-hotels. We're moving at a faster pace than anybody and at higher sales prices."

In November, Sheldon Good and Co. of New York held a sealed-bid, bulk auction of 50 condo units at The Modern, formerly Luxe Lofts, at 8925 W. Flamingo Road.

CityCenter, between Bellagio and Monte Carlo, is an $11 billion joint venture between MGM Resorts and Infinity World Development Corp., a subsidiary of Dubai World. The resort property includes the 61-story, 4,004-room Aria; the nongaming Mandarin Oriental and Vdara; the residential-only Veer Towers; and the 500,000-square-foot Crystals retail development.

Overall, the Veer transaction is a positive development for MGM Resorts, industry analyst Bill Lerner of Union Gaming Group said.

"We haven't seen a residential sale of this magnitude in quite some time and it clearly signals a rebound in the Las Vegas condo market," he said.

While not a major deleveraging event, the bulk sale "flew under the radar" and was not currently in Union Gaming's forecasts for MGM Resorts, Lerner said. The company recorded a receivable from CityCenter of $99 million.

"The transaction should be a positive for the remainder of inventory on the pricing front too," he said. "For reference, there is no condo inventory remaining at the Vdara, given the units are now operating as hotel rooms. On a broader macro level, this is a clear positive sign in a rebound in the Las Vegas housing market."

MGM recently completed refinancing of its existing senior secured notes and credit agreement that will result in annual interest savings of $230 million, Lerner noted. Union Gaming places a buy rating on MGM Resorts shares with a target price of $13.
New York investment firm buying 427 CityCenter condos for $119 million is republished from Online.CasinoCity.com.