Wednesday, November 19, 2008

Cosmopolitan Condo Hotel Project Continues Forward

Cosmopolitan Condo Hotel Project Continues Forward
by Diann Tonnesen

Many proposed high rise condo projects around the country have had the plug pulled in the past two years due to cost overruns and tightening credit. Since Deutsche Bank announced they were beginning foreclosure proceedings on the Las Vegas Cosmopolitan condo hotel project at the beginning of 2008 on their $760 million dollar loan, over 1800 contract owners were holding their breath, wondering if the development would be completed. Or if they would get their money back in full if the development was canceled.

There were many "interested parties" making bids to purchase the project, but Deutsche Bank finally took over full ownership of the Cosmopolitan under an affiliate, Nevada Property I. Deutsche Bank was the high bidder, paying $1 billion at a recent foreclosure sale to acquire ownership of the project. Those still hoping to own a piece of the Las Vegas real estate market on the Strip breathed a bit easier.

And Deutsche Bank didn't let any grass grow under its feet to make sure the project went forward. It had already inked contracts with Related Companies to take over as the resort's new developer. In addition Perini Corp. signed a new contract to complete construction work on the project. Perini had been working on the project from the beginning, and was being paid under an interim agreement since March 2008 when Deutsche Bank began foreclosing after the original developer, Bruce Eichner, failed to complete a deal to secure more financing. Increased construction costs helped drive the Cosmopolitan's construction budget from its original $2 billion price in early 2006 to its current $3.9 billion price, and Eichner was unable to find a new partner with enough capital to infuse into the project.

A letter was drafted to contract owners by the resort's new developer, Related Companies, letting them know of the management changes and informing them of progress to date. This went out to almost 1825 contract holders, assuring them of the project's completion. To date over 50% of the Cosmopolitan's exterior construction has been completed, and it is anticipated that by December of 2008 owners will be celebrating the "topping off" of both towers, including the penthouse units. The new proposed completion date for the entire project is estimated for the second quarter of 2010.

Along with a rebounding resale housing market, this is great news for the local Las Vegas real estate market. For four months straight (July, August, September and October) statistics have shown a significant rise in Las Vegas homes sales, with multiple offers on lower end properties, especially in the segment of Las Vegas foreclosures.
About the Author
Diann Tonnesen has been selling real estate in the Las Vegas valley for more than 25 years and is considered one the city's foremost high rise specialists.

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