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Work resumes at Wyndham Vacation Resorts’ Desert Blue

A casualty of the recession finally has a pulse.

Five years after construction flatlined at Wyndham Vacation Resorts’ Desert Blue, the company has restarted work on the 19-story, 281-unit timeshare on Twain Avenue just west of Interstate 15.

Wyndham officials said Friday they couldn’t offer any details on the project, except to say it’s early in construction.

“We’re trying to get movement started,” said Wyndham spokeswoman Lindsay Graham.

Workers crawled all over the curved tower Friday morning.

Clark County building-permit records also show a flurry of activity at the site. Desert Blue filed just six documents in 2009, to keep permits current. But since January, Wyndham and its vendors have submitted 22 filings.

The documents describe tests to determine how the project weathered the elements during its hiatus, and whether it needs repairs as a result of its fallow period.

An April inspection showed that nearly half of the building’s wall-panel frames were installed when Wyndham mothballed the timeshare. Some welded connections between panels have “light surface rust” and need refurbishing.

Testing and engineering firms continue to inspect the tower and develop plans to repair exposure-related issues.

The 14-acre project was initially scheduled for completion in 2010.

Desert Blue joins several stalled hospitality projects that have started back up or are ready to relaunch. California-based SBE Entertainment began demolition work at the Sahara in February, with plans to invest $415 million to reopen it in 2014 as part of the company’s SLS chain. Also, Genting Group of Malaysia spent about $500 million in March to buy Boyd Gaming Corp.’s Echelon site, where it will build its $2 billion Resorts World Las Vegas megaresort.

The rush of activity indicates that hospitality developers and capital markets see growing consumer demand, said Bill Lerner, a principal and managing director of Las Vegas-based equity research firm Union Gaming Advisors.

“The growth story is pretty exciting in certain markets, like Las Vegas,” he said.

Wyndham and other developers are in expansion mode, “and there’s capital available to do what’s right for the growth profile of their business,” he added.

It’s a stark difference from 2008 to 2011. Then, if a company could find financing at all, it would need 40 percent equity, and it could expect interest rates of 20 percent. Today, 25 percent to 35 percent equity is acceptable, and rates run 8 percent to 9 percent, Lerner said.

“From a debt- and equity-market perspective, I’m not sure how much better things can get in terms of a cost of capital that’s rational,” he said. “Markets are trying to price in all the good news, and they’re certainly demonstrating that the best is yet to come.”

Added Steve Brown, director of UNLV’s Center for Business and Economic Research: “It’s a sign that people have confidence about the future of tourism in Las Vegas. I’m sure existing properties were hoping room rates would go up first, because room rates still aren’t anywhere near where they were in 2007. But I think (the new building) is an indication that investors are seeing the Las Vegas tourism industry bouncing back pretty strongly.”

Wyndham already has three timeshares in Las Vegas and a timeshare at Lake Tahoe.

KGA Architecture is the project’s designer, and Martin-Harris Construction is the general contractor.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.

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