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Published Thursday, June 4, 2009 | 2:05 a.m.
Updated Thursday, June 4, 2009 | 11:46 a.m.
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Beyond the Sun
Another Southern Nevada hotel is in financial trouble because of the recession.
Lenders this week moved to take control of and foreclose on Loews Lake Las Vegas after the hotel's owner defaulted on a $117 million loan.
Loews Hotels, part of New York-based Loews Corp., intends to continue managing the property and maintain the Loews brand there, said Loews Hotels Senior Vice President of Marketing Nancy Mendelson.
The hotel is owned by Loews as a minority investor and an institutional investor partner, Mendelson said.
On Thursday, she called the foreclosure "sort of a sign of the times," referring to the recession that has put numerous hotel properties and loans into default around the nation.
But Loews remains committed to the Southern Nevada property and is keeping it open, she said.
"It's business as usual," she said. "We love that property."
Wells Fargo Bank, trustee for the lenders, sued Loews LLV Hotel LLC in Clark County District Court Tuesday.
Court papers show the hotel company, which is managed by an entity called L.H. Investments I LLC of New York, last month told the lenders that it needed an emergency loan because it was running out of cash and that without the loan it would cease operations.
The lenders, through loan servicing company CWCapital Asset Management LLC, responded Tuesday with an advance of $581,000 to pay operating expenses at the property, the lenders said in the lawsuit.
The borrower, in seeking the emergency loan, defaulted on the underlying loan, the Wells Fargo lawsuit says.
That apparently is a moot point since the borrower is willing to transfer its interest in the property to the lenders in order to get out of the loan and is unwilling to provide any more funds to cover operating losses at the property, a letter from L.H. Investments to the special loan servicer said.
Loews acquired the hotel with the other investor in a deal announced in 2006 when it was called the Hyatt Regency Lake Las Vegas Resort.
Financial trouble at the property was disclosed last year and in early 2009 by credit rating agencies, which downgraded securities that include the loan against the hotel. The loan had been collateralized with other loans into a commercial mortgage-backed security called CD 2007-CD4.
"Wachovia (since taken over by Wells Fargo) determined the loan, which had previously appeared on its watchlist, was at risk for default after communications with the borrower indicated the property was not generating sufficient cash flow from operations to pay the debt service," Standard & Poors said in a March report. "The borrower also indicated it is no longer willing to fund the shortfalls. The performance at the property has been negatively affected by increased cancellations and fewer group bookings."
Standard & Poor's said that as of March, the loan had a balance of $117 million and is secured by the property's 493-room golf course resort. The property includes 110,000 square feet of meeting space, waterfront views of Lake Las Vegas, a spa, gym, four food and beverage outlets and two pools.
At loan issuance in 2006, the property had generated average daily room occupancy of 68.8 percent and average daily revenue per available room of $133.14 during the previous 12 months, S&P said.
But between October 2007 and October 2008, occupancy had slipped to 55.5 percent and revenue per available room fell to $103.77, the credit rating agency said.
In their lawsuit, Wells Fargo and the lenders said they have commenced foreclosure proceedings against the hotel and are asking the court to appoint a receiver to manage and maintain the property.
"Another one bites the dust" by Queen
Guess the hotel will be renamed the "Wells Fargo Motel 6". The other hotel there, the Ritz, is already bankrupt, so it's going to be renamed the "City of Henderson Reststop". When you pee away 33 Mil of taxpayer money to develop a disaster, you should at least have a place for the Public loafers to rest their heads. Now let's watch as the Reflection Bay and South Shore golf courses fold. And finally, Casino Monte Lago will mercifully fail along with the "Village" shops. It will be a fun summer, that's for sure.
Hey Steve, could you post a copy of the Complaint, or at least the case number.
The interesting question, to be traced through the Secretary of State's records, is who really owns the majority interest in the Loew's Hotel building which is being foreclosed. The term "institutional investor partner" covers a lot of territory. That institutional investor partner will be hiding its identity behind a special purpose LLC or other type of company, formed just to own this majority interest in the property owner being foreclosed.
It's unfortunate, for the Loews Hotels company, which is essentially a tenant of the building, that this is foreclosure occurring, because sloppy reporting by others will end up besmirching the company's trade name.
Yet one has to wonder, what kind of "rent" is the Loews Hotels corporation paying to "operate" the hotel?
If "the rent" is just a percentage of the hotel's gross or net income, that would explain why the "landlord" is so very short on cash flow, assuming the occupancy rates at the hotel are "way down".
If the "tenant" is paying a fixed rent, then one has to wonder exactly why the "landlord" was desperate and out of cash.
Again, the key question. Who is the brand name "institutional investor" behind the entity which is the majority owner of the borrower being foreclosed?
Hey nednougat, you forgot to mention that Monte Lago Village is wildly out of compliance with the Americans With Disabilities Act, in terms of people in wheel chairs or on walkers or crutches being able to navigate around the village, let alone safely navigate.
What is even more disturbing is that the sewer main covers in Monte Lago Village say that the sewers belong to the City of Henderson, i.e. that they are not private sewers like you see under private streets. That makes me wonder whether the City of Henderson actually "owns" the streets in the village as public streets.
Under 9th Circuit case law, which the U.S. Supreme Court refused to overturn, cities and counties ARE obligated to make ALL public sidewalks and streets accessible for wheel chairs and people who walk with crutches and walkers. In that appellate case, the issue was cracked city sidewalks which could trip handicapped people. The 9th Circuit said the defendant city was obligated to fix them.
Wouldn't it be awful, economically, if the City of Henderson was sued to make all of Monte Lago Village fully handicapped accessible for people using crutches, walkers and wheel chairs? Imagine their having to rip out all of those brick streets under the "fix the cracks in the sidewalks case" so people using walkers and crutches don't trip!
Hi, the case no. is A 09 591579 B
The mega-banks have to be stabilized, they are too interconnected in the financial system we are all dependent on. After they are well, they should be broken up into smaller pieces so this cannot happen again --- found a cool site; Balkingpoints ; incredible satellite view of earth
When they first started out, they were so snooty snobby and stuck-up out there they acted like they were doing you a favor to sell you a million dollar homesite, the place will be a white elephant for years to come, both the residential and commercial....
also I thought Glen Beck and Hannity and the talk radio crowd said the housing bubble and world economic collapse, was because ACORN forced lenders to loan money to poor people who couldn't afford houses? Gee I din't know ACORN was out at Lake Las Vegas? They sure get around.
Hey,
How about laying off the "elite owner" stuff. I, like many other, residents of Lake Las Vegas (LLV) don't want to hear trite comments on how much the City of Henderson (COH) paid to start LLV. Many of us are looking at losses in value greater than your net worth and can't understand your motives; do you want LLV to fail, dry up and blow away -- what purpose would that serve?
How much revenue has flowed into the COH from all the LLV owners & guests?
Answer: A lot more than you are complaining about.
You people make it seem like there would even be a COH if not for the Vegas lifestyle and tourism which started the whole thing, including LLV.
Would you rather there be no LLV? Well that boat sailed a long time ago, so how about using that immense brain power of yours in a more constructive way to resolve some of the infrastructure problems without destroying what we consider a very beautiful and worthwhile place to invest and enjoy.
Have a nice day, even if you aren't at the Lake today.
Palermo Pal
Palermo Pal hit the nail on the head, Those of you who want this place to fail, why would you wish that on anybody. Some of us Henderson residents work out here and would lose it all if this whole place goes under, but as long as youre not affected huh NEDNOUGAT. Just remmeber, the Las Vegas economy has survived because of places like this bringing people here to pay our taxes, so if your not with it, theres alot of other warm places to live. Ill enjoy the lake sunset everyday.....
As a home owner it disappoints me that most people look at LLV as a "snooty - millionaire row" place to live. I am sorry, but it is not. Sure there are developments there with million dollar homes, but they are also around in other parts of Vegas as well. It would surprise you on how many of us make under $100k a year and still can manage to live at the Lake. Its called a quality of life. We gave up other things to live there. Its called a community for a reason. We are all in this together - let alone even in your neighborhood. Do you like it when YOUR neighbor looses his house and your values drop by $50k when the house he owned is trashed and needs $100k put into it cause he stripped the fixures out? Of Course not. Stop bashing the lifestyle and try doing something to help Las Vegas as a whole..