Monday, April 7, 2008

Plaza is off again...for now

You don't usually think of drama when talking about whether a Vegas resort will ever be built. Or maybe you do.

Less than a month ago, I alerted blog readers to a Wachovia investment note that pointed to the Hebrew newspaper Yediot Ahronot having quoted the folks from the Elad Group as saying that the credit crisis in the U.S. had put plans for a $6 billion, 3,500-room hotel-casino supposedly to be called the Plaza across from Wynn Las Vegas on on hold because of the challenging lending market.

Hours later, a Vegas-based spokeswoman for the project wrote me to say it's not true and provided a statement from Mike Naftali, president of the ELAD Group, as saying there was "no credibility to the rumor." He went on to note that the group that week was getting permits from the "Las Vegas" (we know it as the Clark County) Commission. So I posted a follow-up.

Not being able to read Hebrew (OK, I actually can read the letters and sound out words because of my Bar Mitzvah training, but I can't comprehend because comprehension wasn't terribly important at Oyster Bay Jewish Center where I went to Hebrew school...) I was unable to go back to the Hebrew paper and see for myself what was written.

Except now an Israeli newspaper with an English web site, Haaretz, published last Wednesday this obscure but significant brief that was brought to my attention by Sparky of Las Vegas who must have more stuff on Google Alert than anyone I know:

Tshuva admits Vegas project may be delayed

For the first time, Yitzhak Tshuva yesterday admitted, via proxy Miki Naftali - the head of Tshuva's company Elad - that his Las Vegas project, being pursued with Nochi Dankner, might have to be delayed by the subprime-cum-credit crisis. However, it is also true that Tshuva thinks the crisis will be over by the start of 2009. If not, and the builders can't borrow at reasonable interest rates, then postponement may become inevitable. (Ora Coren)

So the thing's not exactly dead. But it is clearly facing distress. Which is no embarrassment in the current fiscal climate, unless you've overpaid for the land and have no good choices as to what you can do with it OTHER than to build when nobody's going to buy it off you for $35 million an acre. At least not at the moment.

In last week's chat with Wynn on "The Strip", the man himself said he expects the lot across the street from him to be empty for a while and he's not terribly sad about that so long as the Frontier is gone. (Oddly, the huge Frontier SIGN remains five months after the implosion. Why? Did the Neon Museum miss a pick-up date?)

Howard Stutz wrote his Review-Journal column on Sunday on this very topic, focusing on the fact that it was Donald Trump who was saying his second Trump tower may be delayed. And to think Stefanie Schaeffer was just on "The Strip" saying absolutely, positively, all systems are go. I guess Trump trumps, uh, Trumpettes?

And, again, the other key question here is: Does all this weaken the legal hand of ELAD as it sues to own the name "Plaza" in Las Vegas when the hotel from whom they're trying to grab the name is, at the very least, open and operating, and you're not?


GregoryZephyr said...

Having observed developers for a long time, even outside of Vegas, construction financing is always a tricky issue. Unless the developer is paying for it all himself, there's a risk of things going wrong financially every step of the way. However, the developer is usually the last one to announce any delays because he's always either looking for new investors or trying to put on a happy face for buyers and existing investors.

In the meantime, perhaps they could roll a trailer on to the site and establish a "Trailer Plaza" casino.

Anonymous said...

If Trump can't get financed, just like you and me, then we may start thinking he's no better than you and me. Then we may wonder why he wants more per square foot for his properties, if he's no better than you or me. Or if he doesn't want gaming, or can't get a license in Nevada.
Personally, I wonder why they haven't started pricing condos by the cubic foot. We're paying for air, anyway, so we may as well figure they sky as well as the land.
Jeff in OKC

Anonymous said...

Perhaps a 'delay' is motivated by a possible decrease in construction costs; say, 15-20% cost-cut. Dankners 'Sit Tight" policy on the USA has been very disciplined except for the Strip purchase...oh, and last months contemplation of upping the ante on Queenridge Village; a $243 million consideration.