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Gaming Guru

Chris Jones
 

Search for Neonopolis Buyer Goes On

17 September 2004

LAS VEGAS -- Vendors aren't the only ones who've found it difficult to lure paying customers to the struggling Neonopolis retail and entertainment center. The $100 million mall in downtown Las Vegas has been up for sale since mid-May, and those in charge of marketing the property are still hunting for buyers, too.

"We'd like to get this behind us, make some grand announcement and see this thing take off," Mark Bouchard, managing director of brokerage service CB Richard Ellis' Las Vegas office, said this week. "I wish I had something more" to tell the public.

Bouchard has been reminded that like so many other wishes made on Fremont Street, turning a dream into a real-life payday is often a challenge, particularly when that dream involves what's become one of this valley's most visible boondoggles.

Once hailed as a key to redevelopment, the 250,000-square-foot Neonopolis has struggled to attract tenants and customers since it opened in May 2002. Two years later, Parsippany, N.J.-based owner Prudential Real Estate Investors said it would rather sell the mall than attempt to fix its myriad troubles.

Prudential tasked CB Richard Ellis with finding a buyer, and after several months one undisclosed candidate emerged from the pack. Bouchard hoped to complete a deal with that company late last month, but talks fell apart when the bidder couldn't secure the required deposits before an Aug. 31 deadline. That bidder could re-enter the mix, though Bouchard said he's now opposed to granting an extension because two other companies are interested in Neonopolis.

"We think the timetable ... to try to close this by year-end is still realistic," Bouchard said. Two other bidders, whose names he declined to disclose due to contractual prohibitions, have promised they can meet a Dec. 31 deadline to complete a sale.

However, Bouchard views such promises with a sense of skepticism, something he's gained during his 20-plus years in the real estate industry.

"In our position, we're being told nothing but positive things because the potential buyers want to assure us that they have the capability of closing, and that they're going to (close)," Bouchard said.

"But typically these people are working feverishly behind the scenes to put a deal together; sometimes they get there and sometimes they don't." The sales process has left Neonopolis' dozen or so tenants in a collective limbo.

Paul Gordon, senior vice president of Ark Las Vegas Restaurant Corp., which owns The Saloon Bar and Grill, a Neonopolis anchor, said Thursday his lease will allow The Saloon to exit the center at any time. Still, he plans to ride things out for a few more months in hopes a new owner can turn the property around.

"We'd like to know what are the prospects for becoming profitable," Gordon said. "But we won't wait forever."

Despite the first bidder's setback, Bouchard insists all three interested parties are not "small, local companies" but large-scale players with an international presence. He's confident each can meet Prudential's asking price, which he declined to disclose but confirmed is well below Neonopolis' $100 million initial cost.

Finding a suitable buyer is also complicated by Prudential's partnership with the city of Las Vegas, which contributed $32 million toward Neonopolis' development and owns and operates a parking garage beneath the mall.

"Although dollars do drive deals, at the end of the day the intended use by the potential buyer has got to work well for the city," Bouchard said.

City leaders originally hoped Neonopolis would complement, not compete with, the adjacent Fremont Street Experience and downtown casinos. Tenants were initially barred from operating gaming devices, though casino operators last year backed away from that ban.

Still, no gaming machines are now in use at Neonopolis. Las Vegas city representatives did not return calls Thursday, but Bouchard said city leaders remain closely involved in Neonopolis' sales process.