Wet ‘n Wild land sale off; observer sees deals as difficult

Another deal to sell a prime gaming-entitled parcel in the resort corridor collapsed this week and such sales are likely to continue being tough to close for some time, a top local real estate firm said Friday.

That's because buyers are going to find it almost impossible to develop a project on the Strip or in the resort corridor now because of restraints on lending and the depressed gaming market, said Mike Mixer, senior vice president of Colliers International Las Vegas.

"The land is not going to sell unless it is extremely well priced," Mixer said. "None of us have an idea on where that number has fallen. It's so low it's going to take a speculator to buy it because no developer is going to want to pay top or medium dollar for a site you've got to sit on until the market returns."

The latest deal to collapse is the on-again, off-again attempt by a Texas-based developer to buy the old Wet 'n Wild site south of the Sahara.

An investment group led by Christopher Milam this week let expire an agreement signed in December to purchase the 27-acre site for $618 million, or $22.9 million per acre, from a land subsidiary of Archon Corp., a filing Friday with the Securities and Exchange Commission shows.

The agreement called for Milam, who had already received county approval to build a 1,064-foot hotel tower on the site, to buy 60,000 shares of stock for $60 million by March 31.

Milam did not return an e-mail seeking comment.

Mixer, who isn't involved in the Wet 'n Wild sale, said the recession has changed the environment and is attracting a different type of customer looking to buy into the Las Vegas dream of casino development.

"Up until recently I had people who were looking to put together development deals," Mixer said. "Now, all I've got are opportunity-type buyers who are looking for a really, really excellent deal in terms of price per acre so they can afford to hold it, pay the property taxes and wait for the market to come back."

Unfortunately for the buyers, though, "I don't think any of the sellers are prepared to drop that low so we're at a stalemate," Mixer said.

Owners could decide to drop their asking prices in the near term if banks start taking back some of the properties and getting aggressive about ridding their books of nonperforming assets.

That's what's happening with the 22-acre Dragon City resort site on Spring Mountain Road, which is being auctioned off May 16.

Community Bank of Nevada, which holds a $12.5 million bank note on parts of the parcel, recently reached an agreement in Nevada bankruptcy court allowing the bank to collect rents from businesses once the land is sold.

The opening bid on the site, which is entitled for gaming and a 2,200-room hotel, is $27.5 million, or $1.25 million per acre. That's slightly more than the $1.14 million per acre the land was pieced together at originally.

Until recently, the land had been listed for sale for approximately $4.5 million per acre.

On the Strip, the owners of 18 acres across from CityCenter could be foreclosed on in the near future after defaulting on a $475 million loan from Credit Suisse in December.

FX Real Estate and Entertainment defaulted on a $475 million loan on 18 acres of property across from CityCenter and could lose the land through foreclosure to Credit Suisse. FX Real Estate hoped to develop an Elvis-themed resort on the site.

The company said the value of the land had dropped to $218.8 million -- compared with the $221.3 million it cost to acquire the land between March 1998 and May 2005.

"A sale of the land by the company or upon foreclosure by the lenders at or near the adjusted carrying value ... would be insufficient to fully repay the outstanding mortgage loan," the company said this week in a Securities and Exchange Commission filing.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.