70°F
weather icon Clear

Court battle over mortgage on JW Marriott delayed a month

A court battle to control the $160 million mortgage on the JW Marriott Las Vegas in Summerlin — and ultimately perhaps the hotel itself — will remain on hold for as long as a month.

On Wednesday, a trial court judge in New York ruled that a group of investment funds lack legal standing to stop another investor from buying them out, then dissolved a temporary restraining order that had stalled the deal.

However, an appellate judge reinstated the order in an emergency hearing Thursday and gave both sides until Jan. 27 to file briefs. After that, a three-judge panel will rule if the deal can proceed, something attorneys expect to happen in February.

The legal maneuvering comes against an all-to-familiar Las Vegas backdrop of declining revenues and earnings that led the owner, Hotspur Resorts Nevada, to default on the loan in November.

According to Jim Beckham, president of the hospitality consulting firm R&R Global in Las Vegas, the 548-room Marriott is another off-Strip victim of a phenomenon called compression. As thousands of new Strip rooms opened in the past few years and visitor counts declined, rate slashing become a marketing weapon of choice. This compressed the price difference between the Strip and outlying areas, prompting visitors to trade up.

“Any time a customer can get a perceived better room, and in Las Vegas that is the Strip, they are going to book away from the perceived less-desirable, off the Strip,” Beckham said. “When the big guys decide to compete on price, it’s the smaller properties that suffer.”

Further, he noted, the JW Marriott has long touted its proximity to four major golf courses. As the number of rounds played locally has fallen, he said, “There is a high probability that this has also impacted them. They are absorbing a double hit.”

However, Sarah Tanford, an assistant professor at the Harrah College of Hotel Administration at the University of Nevada, Las Vegas, discounted the price rivalry because the Strip and outlying hotels target different customers.

Instead, she said, a resort like the JW Marriott appeals more to people doing business in the western valley or visiting friends and family.

“This is just a problem with the general economy,” she said. “There is less business travel and less money in the local population to patronize a place like the JW Marriott.”

The hotel has a history of problems. It stumbled out of the gate, posting losses from its 1999 opening as the Resort at Summerlin that included the Regent Grand Spa. The next year, its Swiss developers changed the name to the Regent Las Vegas but also put it into Chapter 11 bankruptcy that November, just 16 months after cutting the ribbon. The current ownership bought it in late 2001 and reflagged it the JW Marriott.

According to financial statements contained in a November appraisal by PKF Consulting USA that set the resort’s value at $98.4 million, results have deteriorated significantly since 2007 show glimmers of a rebound.

In the three years through 2010, total casino revenues dropped 23 percent to $61.7 million. This year, the budget projects a further decline to $53 million before a recovery takes hold.

The casino, with 1,212 slots and 20 tables, is managed by Cannery Casino Resorts under a lease expiring April 1.

Total nongaming revenues sank from $59.8 million in 2008 to $40.5 million in 2010. The projection for last year shows the resort on track to gross $44.8 million. The hotel’s occupancy sank from 74.6 percent in 2007 to 55.8 percent in 2009, before rising to 65.8 percent last year. Average rates have followed a similar pattern, declining from $187.98 in 2007 to $131.62 in 2010, but projected to reach $138.95 last year.

Before mortgage payments, the net operating income of $14.9 million fell to $7.8 million the next year but is supposed to hit $10 million in 2011.

In the New York lawsuit, investors holding most of the debt claim that Galante Holdings, the principals of which were not identified, improperly bought a piece of the loan last February. The investor groups contend in court filings that Galante is now trying to “steal” about $60 million in value from them by purchasing all of the remaining debt at less than face value.

Galante and other defendants counter that the February deal was open and legitimate and came with the option to buy out everyone else.

With a valid appraisal in hand, they say they are going ahead with that option according to the terms of the mortgage contract and were prepared to close in December.

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or 702-387-5290.

Don't miss the big stories. Like us on Facebook.
Business Videos
How much do Las Vegas casino CEOs make?
Las Vegas gaming CEOs made anywhere between $1 million and $24 million last year, according to company filings with the U.S. Securities and Exchange Commission. ((Las Vegas Review-Journal)
30-year-old Rio needs a little TLC
Nearly 30 years after the Rio opened, the red and blue jewel that helped catapult Las Vegas to a new level with its buffet and nightclub has lost its status along with its shine.
The latest on the Drew Las Vegas - VIDEO
Eli Segall recounts his tour of the Drew Las Vegas, formerly the Fontainebleau, on the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
Pinball Hall of Fame to move near south Strip
Operators of the Pinball Hall of Fame have been approved to build a new, larger arcade near the south edge of the Strip on Las Vegas Boulevard near Russel Road. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
National Hardware Show underway Las Vegas
The National Hardware Show kicked off Tuesday at the Las Vegas Convention Center (Mat Luschek / Review-Journal)
Caesars for sale?
Caesars Entertainment Corp. has been swept up in takeover speculation since the company’s share price tumbled last year amid disappointing earnings and concerns over a recession. Amid the decline, hedge funds scooped up shares. Billionaire activist investor Carl Icahn began buying shares of Caesars as early as January. Icahn acquired nearly 18 percent by mid-March. In February Icahn called on the Caesars board to study a sale as a way to boost shareholder value.
Las Vegas home prices
Las Vegas home prices grew fastest among major markets in February for the ninth straight month. But amid affordability concerns, the growth rate has slowed down. Southern Nevada prices in February were up 9.7% from a year earlier, according to the latest S&P CoreLogic Case-Shiller index. The last time Las Vegas' price growth fell below 10% was in September 2017, S&P Dow Jones Indices reported.
Free Parking Coming To Wynn
Free parking will come to the Wynn and Encore resorts on May 1, 2019. (Mat Luschek / Review-Journal)
Founding Venetian employees talk about 20 years at the Strip resort
The Venetian, which opened May 3, 1999, is celebrating 20 years on the Las Vegas Strip. Seven original employees talk about opening the luxury resort and working there for two decades. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Sam's Town employees and customers talk of their love for the iconic casino
Longtime Sam's Town employees and customers love each other and love their casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas apartments rents
Las Vegas’ apartment market has accelerated in recent years. Developers are packing the suburbs with projects, landlords are on a buying spree, and tenants have filled buildings.
William Boyd talks about the birth of Sam's Town
On the eve of the 40th anniversary of Sam's Town, William Boyd, executive chairman of Boyd Gaming and son of hotel namesake Sam Boyd, talks about how the casino became one of the first local properties in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
High Roller observation wheel turns five
The world’s tallest observation wheel celebrates it’s fifth year on Sunday, March 31, 2019. (Michael Quine/Las Vegas Review-Journal) @Vegas88s
Escape Room Industry Growing In Las Vegas
Escapology employees discuss the growing escape room industry in the U.S. and Las Vegas. (Bailey Schulz/Las Vegas Review-Journal)
Impact of parking fees on visiting the Las Vegas Strip
There are no data showing a relationship between Strip resort and parking fees and the number of out-of-state visitors to Las Vegas. But there are data showing a relationship between Strip parking fees and the number of local visitors to the the Strip. ‘’As a local, I find myself picking hotels I visit for dinner or entertainment, based on whether they charge for parking or not,”’ said David Perisset, the owner of Exotics Racing. ‘’It is not a matter of money, more of principle.’’ A 2018 survey by the Las Vegas Global Economic Alliance found 36.9 percent of Clark County residents reported avoiding parking at Strip casinos that charge for parking. 29.1 percent reported avoiding using any services from a Strip casino that charges for parking.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
THE LATEST