Moulin Rouge property being considered for industrial uses

The Moulin Rouge property and surrounding site might end up coming back as a series of industrial-use businesses instead of a casino resort.

A judge was slated to decide last Friday whether to approve the sale of the Moulin Rouge property to a developer. But the only developer in the running, Las Vegas Moulin Rouge LLC, did not secure funding for the project.

The previous developer of the 15.5 acres that make up the property and surrounding site on West Bonanza Road went bankrupt in 2008. The property went into foreclosure shortly after in 2009, and the servicing company for the lenders went bankrupt in 2012. The site has been under receivership since 2013, with more than 300 lenders still seeking repayment.

After three years and counting of failed purchase attempts, the receiver of the property, Kevin Hanchett, said it is time to consider other options for selling the property.

“I have been contacted by other parties who are interested in buying, not necessarily the casino portion of the property, but the condo and/or apartment portion for just more traditional use,” like a distribution center, Hanchett said.

He said two developers, Las Vegas Moulin Rouge LLC and AMA Realty, are still interested in acquiring and developing the site as a 15.5 acre package, but the two groups — like several developers before them — have yet to deposit earnest money in escrow.

“I’m beginning to line things up because as we roll into 2017, unless we have a clear runway, then probably selling in a more traditional fashion is appropriate,” he said.

Selling a portion of the property would generate some cash to maintain the other parcels of the property. Maintenance costs include real estate taxes, insurance, security, gaming license renewal fees and attorney’s fees for ongoing litigation around the purchase price of nine former condominium units in the Desert Cactus condominium at 901 McWilliams Ave.

Christina Roush, a Las Vegas developer and real estate broker, said it’s just a reality of the market that developers aren’t able to finance redevelopment projects of such magnitude, especially in depressed areas.

“There needs to be a large cash component for whomever is going to develop that property, and it’s probably going to be a situation where you’re only going to get developers who can do it in what I’ll call bite-sized chunks. And that’s probably what Mr. Hanchett has realized,” Roush said. “He’s had a number of false starts with escrows there, and I feel his pain. It is very difficult to develop in Las Vegas because we’ve been a challenged market from banks’ point of view, from the rest of the country’s point of view.”

Roush, who is also an owner of Tenaya Creek Brewery situated across from the Moulin Rouge property and surrounding site, said she would love to see a casino resort in that area, but it’s a question of what’s viable for the property.

The challenge for the Moulin Rouge property as a casino previously has been finding a way to differentiate itself from and compete with the casinos on the Strip, said John Knott, an executive vice president with CBRE Las Vegas and head of the brokerage’s Global Gaming Group.

The location is possibly better suited to some type of industrial use, he said.

“It’s a very, very good location for proximity to downtown, the Strip and also the freeways,” Knott said.

There is already a Penske Truck Rental and a construction material wholesaler, Pacific Coast Supply, adjacent to the Moulin Rouge site.

AMA Reality did not reply to a request for comment. But Scott Johnson, head of Las Vegas Moulin Rouge LLC, said if other developers buy out some of the nongaming parcels of the 15.5 acres he is interested in, it would not decrease the property value in his eyes.

“I wouldn’t have a problem with it,” Johnson said. “As long as the neighborhood was moving forward (in terms of additional development), I’m OK with it.”

Contact Nicole Raz at nraz@reviewjournal.com or 702-380-4512. Follow @JournalistNikki on Twitter.