Condo project lending a hand


CityCenter has brought in a national mortgage company, managed by the former head of defunct and tarnished Countrywide Financial, to provide financing for buyers purchasing the development's 2,400 high-rise condominiums.

Private National Mortgage Acceptance Co., known as PennyMac, will also oversee a seller financing program for qualified buyers.

MGM Mirage, which owns 50 percent of CityCenter and manages the $8.5 billion development, plans to begin closing sales of the project's luxury units in January. Real estate professionals have expressed concerns because banks have not shown interest in funding high-rise residential condominiums.

"By adding PennyMac as a lending resource, we now provide our buyers with another option to assist with their closing needs," said Tony Dennis, executive vice president of CityCenter's residential division.

Based in Calabasas, Calif., PennyMac is a financial services firm that acquires and manages residential mortgage assets. The company partnered with Nevada-based Evofi One as an origination provider.

PennyMac is managed by Stanford Kurland, the former president of Countrywide Financial, which became synonymous with high-risk loans. The firm collapsed when the housing bubble burst. Countrywide was bought by Bank of America, which eliminated the name and logo.

In an interview with The New York Times in March, Kurland said PennyMac was serving as a model for how the government, working with banks, can help stabilize the housing market. But an attorney with the national Consumer Law Center told the newspaper it was disturbing to see Countrywide executives return to the industry.

CityCenter's seller financing program will include both fixed-rate and a variable-rate option financing.

In a statement, PennyMac Chief Investment Officer David Spector said working with CityCenter gives the company an "opportunity to demonstrate our complete lending model, unique approach to asset management and end-to-end financing solutions."

CityCenter has three residential offerings; the all-residential Veer Towers, which has 670 residences; Mandarin Oriental, which has 227 luxury condominiums housed on the upper floors of its 47-story tower; and Vdara Hotel, a combination condominium-hotel that has 1,495 residential units that can be placed into a rental program where they are leased as hotel rooms.

Roughly 1,100 of CityCenter's 2,400 condominiums and condo-hotel units have been reserved, with potential buyers required to put down 20 percent of the purchase prices, which ranged from $500,000 for studio-sized units up to $9 million for the penthouse suites atop Mandarin Oriental.

The adding of a mortgage company comes on top of October's 30 percent price reduction in CityCenter's condominium inventory. Buyers who accept the price reduction must agree to not list their units for resale for at least 18 months.

Dennis said CityCenter sales representatives spoke to a majority of the potential buyers since the price adjustment was announced. He said there has been a positive response.

However Las Vegas attorney Mark Connot, who represents "a significant number" of CityCenter condominium buyers, said the 30 percent price reduction was inadequate based on market conditions. Buyers, he said, believe the price reduction agreement also requires them to forgo substantial legal rights.

He cited MGM Mirage's devaluation of CityCenter, which is now worth $4.88 billion, about half of what it cost to build. Charges related to the residential real estate were given as part of the reason for the devaluation of the project.

"My clients were disappointed by the offer," Connot said. "We hope to reach a realistic resolution."

Before the price reduction, CityCenter hoped to achieve $2.6 billion in condominium sales. The discount could lower that figure by $780 million. MGM Mirage has collected $300 million in deposits from condominium buyers.

CityCenter closings are scheduled to begin in January at Mandarin Oriental, followed by Veer Towers in February. Vdara closings are expected to begin in March.

Dennis said Mandarin Oriental is 97 percent sold out and Veer Towers is about 67 percent reserved. He and real estate professionals said the challenge will be seling Vdara's units.

Other condo-hotels, such as the Signature Towers at MGM Grand and Trump International, have faced a tough market. Bruce Hiatt, owner-broker of Luxury Realty Group in Las Vegas who specializes in high-rise residential, called the condo-hotel market a "dead" product.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

 

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