Hard times dash high hopes for downtown’s Streamline Tower

In a cautionary tale of the downturn, Streamline goes from swank to repossessed to bargain-basement

Steve Marcus

Streamline Tower near Fremont Street at Las Vegas Boulevard North once held promise as a key to revitalizing downtown. Ground was broken in 2004, before any hint of a downturn, and it opened in 2008 as the housing market was collapsing. Now the bank that took it over is laying the groundwork for an eventual sale.

By Sam Skolnik (contact)

Saturday, Aug. 1, 2009 | 2 a.m.

Condos struggle in icy market (2-6-2009)
Promise unkept? Condo buyers sue (11-14-2008)

More stories about business and the economy

Once touted as a sign of a resurgent downtown Las Vegas, the Streamline Tower has since become a symbol of how the economic downturn has hurt efforts to revitalize the area.

This year, after the owners filed for bankruptcy protection, the bank that funded most of the of the tower’s construction, Chicago-based Corus Bank, took possession. And now, according to local businessmen and city officials, the bank is starting to put out feelers for buyers, who are floating bids that are a fraction of the original $205 million cost of the property near Fremont Street casinos and Las Vegas City Hall.

A bank spokesman could not be reached, but those who confirmed at least a possible interest in the property include the Molasky Group and Rohit Joshi, who represents the owner of nearby Neonopolis.

According to Joshi, the appraised value of Streamline is now $30 million to $35 million.

“The Streamline is a great asset, and the price has come down extremely low,” he said.

He added that Corus has not put the property on the market, so talk of a sale is premature.

Molasky President Rich Worthington confirmed that his company had expressed interest in the property. Molasky and the bank had a significantly different “expectation of value,” he said, so no deal could be reached.

Corus Bank issued $104 million to get the Streamline built. Developers broke ground in 2004, and the property opened its doors on May 1, 2008.

According to city officials and former Streamline employees, Corus Bank — or a purchaser of the tower — has a number of options. The owners could try to maintain it as a condo and hope sales improve as the economy rebounds. Or they could market it as apartments, or even a hotel, to gain immediate cash flow.

“If a bank is smart it would want to evaluate all of its options,” said Scott Adams, the city’s chief urban redevelopment officer.

Adams said the condo’s struggles are unfortunate but couldn’t be avoided given the timing of the building’s opening.

Other downtown condo projects have had difficulty selling units because of the soft real estate market and tough credit market that have driven the recession. The economy has also slowed the pace of other redevelopment projects.

Since it opened, the Streamline has had difficulty selling its 275 units. As of about a year ago, a condo official said just 57 percent of the units had been sold, and only 27 of the sales had closed.

The condo’s woes worsened in October, when 48 irritated buyers filed a federal suit against Streamline and another company, claiming the units they purchased were smaller than advertised, and that Streamline falsely promised that buyers could profit by placing their units in a leasing program.

Set back from Fremont Street to its south, the Streamline is bordered by Ogden Avenue on the north, Las Vegas Boulevard North to the west and the El Cortez to the east.

It’s a swank property that offers such amenities as units with designer touches and a rooftop pool with views of the Stratosphere and Strip hotels.

According to Susan Allen — the former sales director whose husband, Dusty Allen, was one a half-dozen investors who originally developed the property — the building is still operational, with security officers and homeowners association representatives monitoring the site.

Discussion: 20 comments so far…

By DislikesStupidPeople

8/1/09 at 5:11 a.m.

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The fact that Joshi's name even appears in this article should give pause to all parties - seller, bank, City, general population, etc... Beware.
By Vegasvampire

8/1/09 at 7:10 a.m.

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El Cortez would win owning that tower. The views, rooftop pool, and added space would be a feather in ol' Jackie Gaughn/ son Michael's cap.
By stevem

8/1/09 at 8:25 a.m.

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"downtown" is a marketing buzzword, not reality.

drive through that area around 2:30am and let me know if you want to live down there.
By casinokid

8/1/09 at 9:10 a.m.

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Was looking at buying a codo there once then I found out that it was $600,000. dollars for a less than 900sf unit. I guess I wasn't the only one.
By sanddunes

8/1/09 at 9:18 a.m.

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Hard times for all. Corus bank has been added to the FDIC hit list (www2.fdic.gov) of possible bank failures. Five more banks were closed yesterday afternoon making sixty nine so far this year.
By James_P_Reza

8/1/09 at 12:34 p.m.

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Downtown is not a marketing buzzword, but a reality. It is not a "planned community" therefore it must evolve organically. That the economy has stepped in and derailed residential plans is certainly a frustrating, but merely temporary, condition.

Within the past 12 months, several new businesses have opened in or relocated to Downtown, including some with long-time Las Vegas names and reputations. Omelet House, FireFly Tapas Bar, Paymon's Mediterranean Cafe, Gaia Flowers, Valentino's ...

There are some prominent residents living in Soho Lofts and Newport Lofts, and so many have commercial plans the area will show significant transformation in the next few years. The upscale neighborhoods surrounding Downtown - Rancho Circle, Rancho Bel Air, McNeil, Scotch 80s, Rancho Nevada, Pinto Lane - will and do support the commerce of the area.

Developments like Streamline will be purchased for pennies on the dollar, and the new owners will be able to make a profit closing residential units at prices that are more reasonable given current conditions. Early adopters will see significant equity gains as the area grows - not over 24 months, but over five or ten years.

Downtown San Diego took twenty years to recreate, after all.
By stevem

8/1/09 at 2:16 p.m.

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name one prominent person living in soho lofts.

just one.
By CynicalObserver

8/1/09 at 2:51 p.m.

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At one time, the entire "Wilshire High Rise Apartment Corridor" from Westwood (UCLA) to the Beverly Hills city line, was a ghost town of huge, luxurious failed condominium buildings. After 5 years or so, the condo units were gradually sold, and the area became a desirable community. So it is possible, just incredibly costly for the bank which forecloses.

However, Corus Bank would be deluding themselves if they think anyone is going to buy a condo in the Streamline at any price right now, other than something nominal which could be paid for in cash, i.e. $10K to $30K per unit.

There is no rational lending institution who will make a purchase money mortgage loan on those condominiums. The Trump, Palms Condos and City Center have learned the same thing, and their condos are a whole lot "safer" as investments.

The existence of the Streamline project as a "broken condominium" where there are owners and an operating HOA make disposition of the whole building impossible. All Corus has to sell are the unsold condo units. In the meantime, Corus has to pay the monthly HOA assessment on each condo unit they own, or lose the units to foreclosure by the HOA.

The newsworthy question with respect to Streamline Tower is whether the current condo owners have actually taken control of their owners association, or whether Corus Bank controls it directly, or through the number of votes it has to put people on the Board of Directors.

If Corus Bank proposes to do something with their condo units in the building which the majority of the owners don't like, there will be a serious legal war, the likes of which have not been seen since the last series of "broken condominium" foreclosures in the late 1980's - early 1990's.

And if the FDIC takes over Corus Bank, effectively becoming the owner of the unsold condos, Katie Bar the Door: The existing homeowners are in for a really ugly ride, fighting with FDIC asset managers. Been there, done that, not pretty at all.
By Bodytalk555

8/1/09 at 4:08 p.m.

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The condo scam in which speculators fueled a fantasy real estate boom started this recession and will be at the end of the recovery.
By CynicalObserver

8/1/09 at 4:31 p.m.

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Part 2 of 2:

Which brings us back to the U.S. District Court case which the buyers brought against Streamline Towers, LLC and Executive Locations, that same case ordered into arbitration. Nothing further appears in the court's records, after the Notice of Bankruptcy for Streamline Towers, LLC was filed. One defendant, Executive Locations, LLC, didn't even have a lawyer in the U.S. District Court case.

Streamline Towers' Motion for Reconsideration filed in the bankruptcy court contained a declaration by the company's chief executive, who claimed, among other things, that Corus Bank had expressly approved the form of purchase contract the prospective buyers signed. Obviously, that claim, as well as Streamline Towers LLC's owners' feeling of betrayal by Corus Bank, may cause a shifting of allegiances in the arbitration proceeding where the angry buyers are trying to get back their $9,225,404. That arbitration proceeding can "now start up again", now that the Streamline Towers, LLC bankruptcy is to be dismissed.

Quite obviously, the complaining buyers are going to end up with no money recovery from Streamline Towers, LLC in the arbitration, because its sole asset was the foreclosed condominiums. That means Corus Bank and Executive Locations will be the primary targets for the angry buyers' claims for money damages in the court-ordered arbitration.

From my point of view, Corus Bank made a stupid move intervening as a defendant in that U.S. District Court case, which is now supposed to be arbitrated. Corus Bank accomplished nothing for itself, but is now a party to a legal proceeding with angry buyers. Dumb, dumb, dumb. But then again, only a fundamentally dumb lender would have lent that much money to build expensive condominiums in a dumpy, marginal neighborhood in Las Vegas.
By CynicalObserver

8/1/09 at 4:33 p.m.

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Part 1 of 2:

As to the Federal lawsuit filed by the 48 angry Streamline buyers, out of curiosity, I looked it up in the Federal Court docket.

The original case, filed in U.S. District Court in Las Vegas, No. 2:08-cv-01323-LDG-GWF, was forced into arbitration by Judge Lloyd George, on the motion of Streamline and Corus Bank, which intervened in the case on Streamline's side. Corus Bank was represented by Lionel, Sawyer & Collins, Las Vegas' largest and most influential law firm.

Lionel, Sawyer & Collins took the laboring oar, and convinced the judge, using U.S. Supreme Court case law that if there was an arbitration clause in the condo purchase contract, the judge could not let the lawsuit go forward, and was instead obligated to send it to arbitration. The judge agreed.

Once the case was forced into arbitration, the original plaintiffs' lawyers quit. A new team of lawyers, representing some but not all of the plaintiffs, joined the case.

Then Streamline Towers LLC filed bankruptcy in Washington State, U.S. Bankruptcy Court for the Western District of Washington, Case No. 09-14122.

Obviously, Corus Bank then turned against its former ally in the lawsuit brought by the angry buyers, and Corus Bank got permission from the Washington bankruptcy court to foreclose on the condo units in the building which had not already closed escrow. That permission was granted on 5/19/09.

The interesting dollar figures, from the developer/debtor's "Motion for Reconsideration of Relief from Stay to Foreclose", filed by Streamline Towers' lawyer, show that Corus Bank was owed approximately $122,500,000 on 5/19/09, that the bank's appraisal of the unsold condominiums was $97,000,000 as of that date, and the amount of the angry buyers' forefeited deposits in escrow, which Corus Bank controlled, was/is $9,225,404.

Curiously, the judge's written order granting relief from stay to foreclose didn't bother to include the actual unit numbers which Streamline Towers, LLC still owned. Instead, the judge left it up to the bank and the foreclosing title company to figure that out. As a result, the bankruptcy court records don't disclose just how many condo units Corus Bank obtained through foreclosure, making it hard to determine whether Corus Bank was being rational or irrational in its valuation of $97 Million for the condos it would obtain through foreclosure. Obviously, neither the Molaskys nor Joshi are crazy enough to spend anywhere near that "current appraised value" to buy those unsold condominiums.

Soon after Streamline Towers, LLC's loss of those motions and the building to foreclosure, Streamline Towers' lawyer moved to dismiss the bankruptcy case. Once the bankruptcy is dismissed, the arbitration case between the angry buyers whose deposits were forfeitted and Corus Bank and Executive Locations can go forward.
By LVPaco

8/1/09 at 6:06 p.m.

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Nicely Said James...
By shrek

8/1/09 at 11:21 p.m.

Suggest removal

Think about this, a person is elected to the U.S. Congress and serves only one term. The pension plan pays that person, full salary for the rest of his/her Life. WOW !
Propose this in 2009:

START A BILL TO PLACE ALL POLITICIANS ON SOCIAL SECURITY

Perhaps we are asking the wrong questions during election years.

Our Senators and Congresswomen do not pay into Social Security and, of course, they do not collect from it.

You see, Social Security benefits were not suitable for persons of their rare elevation in society. They felt they should have a special plan for themselves. So, many years ago they voted in their own benefit plan.

In more recent years, no congressperson has felt the need to change it. After all, it is a great plan.

For all practical purposes their plan works like this:

When they retire, they continue to draw the same pay until they die.
Except it may increase from time to time for cost of living adjustments...

For example, Senator Byrd and Congressman White and their wives may expect to draw $7, 800,000.00 (that's Seven Million, Eight-Hundred Thousand Dollars), with their wives drawing $275, 000..00 during the last years of their lives.
This is calculated on an average life span for each of those two Dignitaries.

Younger Dignitaries who retire at an early age, will receive much more during the rest of their lives.

Their cost for this excellent plan is $0.00. NADA!!! ZILCH!!!

Now do you wanna talk about their 'gold plated' health care paid for in full by us taxpayers?

Let's demand that Congress suspend all the perks they are doling out to themselves until we taxpayers get the same benefits they vote for themselves. ARE YOU WITH ME?

Contact your elected officials here: (enter your zip code on the left side of the page)
http://www.congress.org/congressorg/home...
By dipstick

8/2/09 at 6:13 a.m.

Suggest removal

i cant believe that a bunch of nineteen year olds bought a condo in downtown vegas and turned around and complained that the rooms were too small. stevem is right; i was there at 11 in the morning and it didnt look too good then. maybe the plaintiffs are from some eastern european country where downtown vegas is the place to be. you get what you pay for!
By rcrpower

8/2/09 at 5:52 p.m.

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The city should buy the tower, reconfigure it for their use. At sixty or seventy million dollars total this is a lot cheaper than building new.
By Phargo

8/2/09 at 8:43 p.m.

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I quit going to Fremont street years ago, the whole place smells like an elephant cage.....Phewwww! I think the pipes under the street are leaking. Month old Kimchee smells better.
By theduchampian

8/4/09 at 1:57 p.m.

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Ditto Paco, and thank you James for always having the energy to constantly correct peoples ignorant rants.

I actually don't want any of these folks who are commenting about Downtown to be a part of our community when they do not live or work down here. So maybe we just let them say whatever they want, obviously we get it, and won't live anywhere else.

No one is going to convince me that Summerlin is a fun place to live, no matter how eloquent or engaging the argument. Let all these people think that Downtown is horrible, and we will keep it organic, and growing at just our pace. I can barely keep up with all the events that take place anyway!

J
By OlaMan

9/12/09 at 11:32 a.m.

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September 11th wasn't a good day for Corus Bank. On September 11, 2009 the FDIC took over Corus Bank. The Streamline Tower project was just one of many of their condo development loans that went sour throughout the US. It appears that the Bank had overestimated the values of many of its property loans.
By paco

9/13/09 at 1:03 p.m.

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Siegal paid $21m for the Gold Spike, $5m for the Travel Inn next door, and $10m to renovate the property. So you are telling me that Streamline Towers is worth no more than the renovated Gold Spike/Travel Inn? That would make the condos worth little more than $100K apiece.
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If it really goes for that cheap, than El Cortez should buy it and make it a swanky hotel.
By vaisanava

9/20/09 at 2:53 p.m.

Suggest removal

http://www.fdic.gov/bank/individual/fail...
FDIC paperwork on Corus.
http://www2.fdic.gov/drrip/cs/Detail.asp...
FDIC contact on Loans

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