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Howard Stutz
 

Trump Vegas project gets long-term financing

19 March 2010

LAS VEGAS, Nevada -- Trump International Las Vegas has secured long-term financing for the condominium-hotel project that fell victim to the collapsing economy and is now operating primarily as a nongaming Strip hotel.

The undisclosed amount of financing, secured by the privately held Trump Organization with a group of banks, lowers the property's mortgage payments.

"I think this says something positive about Las Vegas and is a good sign," New York billionaire and Trump Organization Chairman Donald Trump said Thursday. "This type of financing wouldn't have happened a year ago."

Trump said he isn't planning any changes in the 64-story gold-glassed tower. Trump International, which has a spa and two restaurants, sits at the back end of the Strip property that once housed the New Frontier, across from Fashion Show mall and Neiman Marcus.

"There are people who come to Las Vegas, who want to stay in a nonsmoking, nongaming luxury hotel," Trump said. "We're happy with our location and its privacy. The financing helps us pay down our mortgage and we'll wait it out until the market comes back."

About 85 percent of the 1,282-unit building, which has one- and two-bedroom condominiums and 50 penthouse-style suites, is being used as a hotel.

The financing won't translate into increased condominium sales. Trump said it would be some time before the Strip high-rise residential market recovers from its nosedive.

Instead, the Trump Organization refocused the $1.2 billion project into a nongaming hotel, part of a collection of Donald Trump-owned and operated hotels in New York and Chicago.

Trump said hotel rooms are averaging "about $135 to $140 a night, which is what you would expect right now in Las Vegas."

Still, the figure is far below the $349 a night figure Trump thought the building would secure when the tower opened in April 2008. At the time, almost 100 percent of the condominiums had been claimed by prospective buyers and Trump was planning an identical second tower on an adjacent site. A $5 billion hotel- casino version of New York's famous Plaza Hotel was being planned for the New Frontier site.

But credit markets collapsed, mortgage lending for high-rises dried up and financing for new construction evaporated.

In a January research report on the troubled Strip high-rise condominium market, Las Vegas-based Union Gaming Group said 76 percent of the Trump International condominium units were unsold. Only six, however, were in default.

Union Gaming Group Principal Grant Govertsen, who authored the high-rise report, said news of Trump securing financing was a good sign for the market. He said little public financial information is known about the Trump International because the building doesn't have a casino and is not publicly traded.

"It's a positive sign if the lenders are willing to work with a building rather than just take the keys away," he said.

He suspected that the Trump International has a higher-than-normal revenue per available room figure than most other nongaming hotels. Revenue per available room is a nontraditional accounting figure Wall Street uses to determine profitability.

Trump said a second tower is far off, and he and co-owner Phil Ruffin may consider other uses for the land.

"At this time, the best thing to do with the land is nothing," Trump said.

Trump Vegas project gets long-term financing is republished from Online.CasinoCity.com.