CityCenter Still Causing Headaches for Casino Operator MGM
After dealing with months of financial insecurity directly related to the CityCenter project, MGM Mirage is now facing a new concern from the casino resort. Thousands of condominiums which had been pre-sold are facing buyers who are demanding either drasticaly reduced prices or even defaulting altogether.
According to the Wall Street Journal, 1500 units have seen deposits placed on 2440 total condos for a total of $313 million. But the contracts were written two or more years ago, when Las Vegas real estate was spiraling upward at one of the fastest rates in the country.
Now,with the local market in as bad a funk as exists in US property sales, a showdown is coming between the gambling operator and its contracted buyers.
"It is simply not possible by any stretch of the imagination to close on the units at the contracted price," said Mark Connot, a partner with Hutchinson & Steffen, a firm representing some of the buyers. Connot told the Journal, "Our position is they need to adjust the price to market value."
Thus far, MGM has refused to discount or renegotiate any deals already signed. But local real estate agents express concern that, without serious adjustments, many buyers will just abandon their prospective units, leaving thousands of vacancies in an already-overloaded market.
Worse for MGM, many of the early purchasers are among the biggest high-rollers and top level employees of the company. As one buyer told the paper, "It's tricky for MGM Mirage. You make your best customers angry."
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|Posted by: Realist||When: 07/09/2009 07:51:26 AM EST|
|Maybe they should realize MGM can't give what they don't have.|