The bankruptcy filing late Tuesday by one of the biggest private homebuilders in Southern Nevada underscores the ongoing struggles the recession-wracked housing industry is causing area developers.
The Rhodes Cos. and 31 affiliated companies filed for Chapter 11 bankruptcy so they can restructure their debts. The companies reported between $100 million and $500 million in assets and between $100 million and $500 million in liabilities.
Rhodes, who does business as Rhodes Design and Development, has sold only 27 home sales in Clark County so far this year as of Sunday, down from 86 home sales in the first quarter of last year, according to Home Builders Research.
The number of homebuilders in Clark County also is down. Home Builders Research counted 38 homebuilders at year-end 2008, down from 47 at the end of 2007. The total was 77 a year earlier when the economic slump was starting, according to the research firm.
"Every month, more and more of them are falling by the wayside," said Dennis Smith, president of Home Builders Research.
"We’re waiting for the resale (home) market to come around and see some price stability," Smith said. The number of resale home transactions is increasing, but the sales prices are dropping, he said.
"I think we’ve hit the bottom," Smith said. "It’s going to be a long bottom."
Builders who filed for bankruptcy, "will be back when the market turns," Smith predicted. "I guarantee they will be back."
Rhodes said his company’s Chapter 11 bankruptcy was caused by the recession.
"The economic crisis affecting Las Vegas, along with the inability to secure alternative and cost-effective financing, has hurt homebuilders harder than any other industry, particularly independent companies such as ours," Rhodes said in a statement Wednesday.
Station Casinos said the Rhodes bankruptcy would not affect the future of Durango Station, which is planned for 70 acres bordering the Rhodes Ranch community on Durango Drive south of the Las Vegas Beltway.
"The Rhodes Ranch area is built out, which is a key factor for us developing an entertainment destination," Station Casinos spokeswoman Lori Nelson said.
The locals gaming company bought the land from Rhodes in 2000 for an undisclosed amount. The company said last year it plans to build a 201-room hotel with a casino, meeting space, pool, and a large shopping complex.
The main assets of the Rhodes Cos. include Rhodes Ranch and the Tuscany community in Henderson, according to Rhodes.
The assets were collateral for a $500 million credit line arranged by Credit Suisse in November 2005 and funded by Highland Capital, General Electric Investment Corp., Cypresstree Investment Management, Sorin Capital Management and Credit Suisse.
Rhodes said it filed for bankruptcy because the company was unable to make a Tuesday principal and interest payment to the Credit Suisse loan syndicate.
Credit Suisse also is lead creditor for a syndicated loan to Lake Las Vegas, which filed for Chapter 11 bankruptcy last July. The bank has arranged a series of loans for high-end properties in the West, including the Yellowstone Club in Montana; Promontory in Utah; and Turtle Bay Resort in Hawaii, according to a Bloomberg News story updated on March 5.
A spokesman for Credit Suisse declined comment. A spokesman for Rhodes did not to respond to questions Wednesday about possible layoffs at Rhodes’ companies, and James Rhodes did not return a call for comment.
The bankruptcy case was assigned to Judge Linda Riegle.
Review-Journal writer Arnold Knightly contributed to this report. Contact reporter John G. Edwards at jedwards@ reviewjournal.com or 702-383-0420.DECLINING NUMBER OF HOMEBUILDERS
End of 2006 – 77
End of 2007 – 47
End of 2008 – 38
SOURCE: Home Builders Research