Get ‘em while they’re cold

Realtors expect MGM Mirage to slash CityCenter condo prices

Ulf Buchholz

A view of MGM Mirage’s CityCenter along the Las Vegas Strip.

By Buck Wargo

Fri, Aug 14, 2009 (2 a.m.)

Real Estate in Crisis

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MGM Mirage is expected to cut its condominium prices at CityCenter by about 30 percent, two knowledgable Las Vegas Realtors said.

The price cuts will apply to units yet to be sold as well as those MGM Mirage has already made deals to sell, the experts said.

For months, MGM officials have said they have no intention of cutting prices despite requests by some buyers who agreed to purchase units.

But the issue was put in the spotlight when MGM CEO Jim Murren told bloomberg.com that CityCenter may cut prices. Real estate observers say the cuts will happen.

“The 30 percent is real, and in some cases it may go more than 30 percent,” said one real estate agent who requested anonymity because he does business with MGM Mirage.

CityCenter said it has sold about 1,300 of its 2,500 residential units.

Some observers say MGM has no choice but to cut prices because there is too much inventory on the Strip. Buyers are going to have trouble closing because of the lack of financing and prices as high as $1,500 a square foot, one observer said.

Prices range from $1.4 million to $10 million in Mandarin Oriental, in the high $400,000s to just under $4 million in the two Veer towers and $600,000 to just under $3 million in Vdara, the condo hotel.

Mandarin Oriental has 17 penthouses remaining in the 217-unit building. Veer has sold more than 60 percent of its 670 units, and Vdara has sold 45 percent of its 1,570 units, according to CityCenter.

Bob Hamrick, CityCenter’s broker, says no decision will be announced on prices until the end of the month or early September. Any decision would have to be made by MGM and Dubai World, its partner in the project, he adds.

“We remain in the process of recalibrating prices to make it fair for existing owners and to make it compelling for further purchasers to buy,” Hamrick says.

CityCenter started selling units in January 2007 when there was a lot of interest, but the world has changed, Hamrick says.

“CityCenter remains a unique product that can’t be touched by anything else in Las Vegas, but there are some realities we recognize, and we have to respond.”

Murren’s interview with bloomberg.com elicited a positive response from lawyers representing several buyers of CityCenter condos. Mark Connot, a partner with Hutchison & Steffen, says he’s glad to hear MGM has recognized the decline in the price of real estate.

Not only does it take into account what’s happening with the economy, but the taint of the construction problems at the project, he says. Nobody knows for sure how widespread the problems are, and buyers are worried that it might affect resale values even if their unit doesn’t have a problem, he says.

Connot says he’s heard rumblings that price cuts could be 20 percent to 30 percent. Cuts have to be made because buyers’ wealth has taken a hit, and it’s harder to obtain financing, he says.

“I think a fair number of people have looked at this and say unless they get down to market value or close to it, people may walk,” Connot says.

Real estate experts are expecting MGM to develop a plan that helps buyers get the financing to purchase the units.

Luxury high-rise Realtor Bruce Hiatt says CityCenter has called in prospective buyers for a focus group to discuss various issues, including pricing.

The condominiums are expected to open by the end of the year. That includes Vdara, which is a condo hotel owned by investors who can put their units in the daily hotel rental pool if they choose.

Some real estate observers say they won’t be surprised if CityCenter cancels sales of Vdara because of lackluster sales and weak demand for the condo hotel market. Many projects are facing lawsuits from investors who are disappointed at the revenue they are earning from their units.

There is competition from Palms Place, Trump and other projects, and some suggest MGM will convert Vdara into a resort hotel and consider condo sales down the road.

“There are a lot of rumors out there, and I wouldn’t be surprised if that happened,” said another Realtor, who also commented on condition of anonymity. “Everyone is buying time until financing comes back.”

Hamrick called any suggestions of Vdara being converted into a hotel just a rumor.

Real estate observers said they expect any Vdara buyers will be pushed to buy at Veer instead.

Discussion: 5 comments so far…

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By cardtel

Aug. 15, 2009

8:48 a.m.

Flag

Tell these wet behind the ears pencil pushers to come down out of their MGM Mirage Ivory Tower to street level and open their eyes. They are dead in the water. No price discount of any type will work. Close up shop for five to ten years.
By realtybites

Aug. 15, 2009

1:23 p.m.

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The only option that would make sense for Vdara is if its contract holders are given the option to transfer their deposits to purchase in Veer or Mandarin Oriental or otherwise refund their deposits in full. The reality is that it is nearly impossible to obtain financing on a condo-hotel unit. Those that end up closing will be very few. Price adjustments will spiral downward in an attempt to close more sales penalizing those that honor their contracts and further weakening property values of other units at CityCenter and other strip properties.

And from MGM Mirage's perspective, running a condo-hotel will prove to be a loss in the long run and is not a viable option for a successfully operating luxury hotel.

The condo-hotel concept was brought to Las Vegas by short term thinking on the behalf of the developer and will end up being a long term liability and ultimately a huge detriment to MGM Mirage.

Those executives that don't see this as the right thing to do, don't fully understand the condo-hotel concept and it's affect on cash flow and operations, as well as the long term negative consequence to CityCenter property values.
By WhistleBlower

Aug. 16, 2009

1:34 p.m.

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READERS PLEASE NOTE:
2009 Class Action Lawsuit
Filed against MGM-Mirage City Center Broker of Record Robert Hamrick et al
in the State of California.
Superior Court of California
County of Santa Clara
Filed: January 2009
case # 1-09-cv-133357
Against Robert Hamrick, Shayna Goldstein and Global Property Networks
*PLEASE ALSO BE ADVISED:
This Class Action Lawsuit deals specifically with the illegal sales of more than three hundred (300) condominiums in Las Vegas by City Center's Broker of Record Robert Hamrick and his agent Shayna Goldstein.
Bobby Baldwin, Hamrick and most egregiously, the MGM-Mirage City Center Board of Directors and their corporate lawyers (Snell and Wilmer) are fully aware, and have (since 2006) been fully aware of these illegalities and have done nothing to protect Buyers at City Center against their Broker of Record Robert Hamrick.
This is the same corporate procedure and strategy (deception) used in the 2008 Lanni resignation. MGM did nothing to inform Shareholders that their con-man Chairman of the Board, Terri Lanni had lied for years about his credentials. Only when Lanni's perpertration of resume fraud had been "outed" to the Las Vegas press by an independent corporate investigator DID MGM take action. Same deceptive drill here just a different day.
Buyers of the MGM City Center condos' should call FORWITH upon Jim Murren , Bobby Baldwin(whom we all know is holding a losing hand at CITYCENTER buts want the Buyers to take the hit for him) and demand out of their contract based on the legal fact that Hamrick sold property illegally and should not be representing them in the transaction as a legally licensed Nevada Broker.
Bobby Baldwin and the executives should come clean and cashier Hamrick for the illegalities by himself and Goldstein in the State of California where they have never held a California license yet sold hundreds of Las Vegas condominium properties
the web page to look at the case in California Superior Court in re: Hamrick is:
http://www.sccaseinfo.org/civil.htm
By Bakersfield (Joe Stormont)

Aug. 19, 2009

2:18 p.m.

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Anyone wishing to buy my house for 30% below it's January 2007 value?
Just let me know!
By DJS

Nov. 4, 2009

10:15 a.m.

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Anyone had any success getting out of their contract to purchase at Vdara?

contact me at sloatgdn@gmail.com