Lake Las Vegas in Forclosure

Discussion in 'Economics' started by ByLoSellHi, Jul 26, 2008.

  1. I really liked this place when I stayed there several times. I had a feeling that it would go under once we got a real heavy economic downturn, and it has succumbed:


    Lake Las Vegas Owners Place Resort in Bankruptcy

    Failure Is the Latest In String Plaguing
    Projects in the West

    July 21, 2008; Page B5

    The owners of Lake Las Vegas -- a resort community that boasts three golf courses, two luxury hotels and a 320-acre man-made lake in the desert outside Las Vegas -- placed the project in bankruptcy proceedings, the latest in a string of failures plaguing upscale developments in the West.

    [Lake Las Vegas]
    Associated Press
    Luxury homes located at Lake Las Vegas in Henderson, Nev.
    The development has entered bankruptcy proceedings.

    The development is owned by a unit of Las Vegas-based Atalon Group, which specializes in turning around financially troubled companies. On Thursday Atalon put the development, Lake at Las Vegas Joint Venture LLC, and 14 affiliates into Chapter 11 protection in U.S. Bankruptcy Court in Las Vegas, weighed down by a combination of more than $800 million in debt, the housing downturn and lack of cash brought on by the global credit crunch.

    The bankruptcy filing was the result of "too much debt and our inability to pay it down combined with the threat of litigation, no liquidity and a very difficult real-estate market," said Atalon Chief Executive Frederick Chin.

    In addition to its immediate cash needs, the project, located about 20 miles from the Las Vegas Strip in Henderson, Nev., is facing potential lawsuits from homebuilders. Various lenders to the development's three golf courses -- two designed by Jack Nicklaus and one by Tom Weiskopf -- are also attempting to foreclose on the properties.

    Mr. Chin said the bankruptcy filing will allow the company to implement a revised business plan that will focus on appealing to full-time residents and not just upscale second-home buyers attracted by the underutilized golf courses. The project is valued at less than the $670 million owed to the lending group led by Credit Suisse.

    Developers broke ground on the massive 3,600-acre project about 15 years ago. The plans call for 9,000 homes, about 1,600 of which have been built. The development, which encompasses 29 neighborhoods, includes Mediterranean-style villas and multimillion-dollar estates.

    Atalon acquired Lake Las Vegas earlier this year after its original developer, Transcontinental Corp., defaulted on a $540 million loan provided by a group of lenders led by Credit Suisse. The investment bank is providing the development with a $127 million bankruptcy loan to keep the development's facilities, including the golf courses, running as it works to restructure its business.

    In addition to Transcontinental, a company owned by Las Vegas developer Ron Boeddeker, other former shareholders in the project included billionaire Texas investors Sid and Lee Bass.

    In 2004, the former shareholders took $470 million out of the company. According to court papers, Atalon intends to look into the events surrounding the payment to shareholders and other insider transactions that left the project undercapitalized and ill equipped to survive a housing downturn.

    The downturn in housing and the resulting credit crunch have caused several high-end Western resorts -- featuring multimillion-dollar homes and championship golf courses -- to run aground in recent months.

    The stress was evident at Lake Las Vegas, where in April one of the resort's hotels, the Ritz-Carlton in Lake Las Vegas, filed for Chapter 11 to stop foreclosure of the $103 million mortgage.

    For Credit Suisse, the Lake Las Vegas bankruptcy marks the third time this year it has found itself in bankruptcy court after an upscale Western resort couldn't pay debts.

    The investment bank is also sparring with the developers of Promontory Ranch, an upscale development near the Utah ski area of Park City, and Idaho's Tamarack Resort LLC, located about 90 miles north of Boise, Idaho. Combined, the three developments owe Credit Suisse-led lenders more than $1 billion, according to bankruptcy-court filings. Credit Suisse wasn't available for comment.
  2. galiano


  3. It's what happens when you try to build paradise in a desert.
  4. I did some work there a couple years back. The prices were ridiculous to me. It's out in the hottest area of Vegas, in the middle of the dry ass mountains. Then they have the fake lake and golf courses. I always wondered how long Vegas would be able to support the overuse of water. I think that's the next big shoe to drop in Vegas, water rights.
  5. clacy


    I stayed there 3 years ago and it's a very nice place, but I always felt like it's way too far away from the strip. I can understand that some people would prefer to stay away from the strip, but not that far. The strip afterall, is the whole point of going to Vegas.