Centra sells more of its LV valley properties

Centra Properties, a local developer responsible for $3 billion worth of projects, has liquidated nearly all of its Las Vegas area assets with the sale of six buildings inside its marquee property -- Centra Point -- for $97 million.

"The project reached the point where it's become very desirable to institutional investors," Jim Stuart, Centra's founding partner, told Business Press in October. "And we are opportunists."

The 400,000-square-foot office complex is at Durango Drive and the Las Vegas Beltway. The 26-acre property is fully leased to high-profile corporate tenants, including G.C. Wallace, Pulte Homes, State Farm Insurance, R.H. Donnelley, First American Title, Warmington Homes and Stewart Title of Nevada.

Average rents are $2.10 per square foot making Centra Point one of the valley's richest and most successful Class B office developments. The 3-year-old project consists of nine two- and three-story, concrete-and-glass buildings. Seattle-based pension fund adviser Washington Capital Management paid $323 per square-foot for the six buildings, setting a new standard for the valley's office market.

"There is a lot of buyer upside on the value of this property," said Tom Stilley, senior vice president of Colliers International's Office Division, who helped broker the sale. "There were some leases done far current below market prices, creating tremendous rollover opportunities in the future."

Buildings I and V are expected to close sale soon. The three-story Building I, which is occupied by Service First Bank, fronts the Las Vegas Beltway.

The two-story Building V is occupied by Westar Credit Union. The property was listed for sale late last year.

Centra Point's recent sale marks the latest in a series of company divestitures stretching back to 2005. The 7-year-old real estate firm last year sold the 32-acre Southtech Industrial Park at Dean Martin Drive and Flamingo Road where it had once planned a $550 million mixed-use development. The property fetched nearly $12 million an acre.

In May 2005, Centra unloaded 25 acres on the north side of Harmon Avenue, between Paradise Road and Koval Lane, to the Edge Group for $202 million.

It marked a 62.8 percent premium over the original purchase price just two years earlier. The site was the location of the failed $3 billion Las Ramblas condo-hotel-casino complex that was canceled amid a high-rise market downturn.

The company further streamlined assets last year by selling its construction division to employees Charlie Mitchener, Eric Smith and Dante Mena for an unnamed price. The trio later formed Strata Building Group but kept Centra Construction's contracting license and client roster as part of the deal.

"We are trying to make sure we have the resources available to take advantage of a shifting real estate market," Stuart told the Business Press in 2006. "We are reorganizing Centra to have cash on hand to be able to solve problems."

Some of those problems are soaring development costs, including construction, land and financing. Permitting now takes twice as long, stretching six months or more, while raw construction materials costs are rising 12 percent to 14 percent annually, industry observers say. Rents, however, have lagged far behind. This has made it tougher for new projects to work financially.

Centra's remaining local assets now consist of a few land parcels and part ownership of Town Square at Las Vegas Boulevard South and the I-15/Las Vegas Beltway interchange.

The $750 million, 1.6 million square-foot, mixed-use development is scheduled to open this month. Plans for Town Square, co-developed by Turnberry Associates, call for 150 stores, 12 restaurants, a 20-screen multiplex and nine office buildings.

"Realistically, you cannot buy property at today's retail prices and still build things, unless your have a competitive advantage," said Jeremy Aguero, principal of Applied Analysis, a Las Vegas-based business-advisory firm. "Developers must now have cash on hand in order to make projects happen. Banks and Wall Street are tightening lending requirements. As a result, we're dealing with a new reality that's going to be around for a while."

This story first appeared in the Review-Journal's sister publication, the Business Press. Tony Illia can be contacted at tonyillia@aol.com or (702) 303-5699