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CIM buys Turnberry units for $48.3 million

Real estate investor CIM Group has waded aggressively into the high-rise condominium market, buying the remaining 279 developer-held units at the Turnberry Towers for $48.3 million.

In doing so, Los Angeles-based CIM completed at a substantial discount to list price what may be the largest bulk real estate purchase ever seen in Las Vegas that did not involve a bank. Although deeds recorded in October did not assign values to individual Turnberry units, the average came to $173,000. By contrast, the lowest previously listed at the Clark County recorder’s office was $203,000, with only nine less than $300,000.

By another measure, CIM paid $135 per square foot on average, although the units generally are not finished inside. According to figures from Marc Ehrlich at Hi Rise Living, short sales at Turnberry in the past year have closed at $206 per square foot, while units held by banks after foreclosure ran at $227 per square foot.

“At the price they paid, CIM has a lot of room to maneuver,” Ehrlich said.

Executives at CIM, which also owns the shell of the Lady Luck, recently renamed the Downtown Grand, did not return calls seeking comment on how they will proceed.

Turnberry sales representative T.T. Tran said, “We’re going along just as before. Nothing has changed for prices or procedures.”

One-bedroom units start at $245,000, with no set maximum price.

The two 45-story Turnberry Towers broke ground just north of the Las Vegas Hilton in 2006, when high-rise living was all the rage on or near the Strip. But like so many of its neighbors, Turnberry opened as the real estate bubble was popping, leaving many of the 636 units empty.

Only 39 of the CIM units are in the east tower, which opened first, while 240 are in the west tower.

The Turnberry Place towers, built earlier on the west side of Paradise Road, had the same developer but an otherwise different ownership and financial structure.

As it faced a default on the $360 million construction loan in early 2009, original investor Prudential Insurance Co. of America stepped in to make a $164 million payment, according to court documents. In the aftermath, it ousted partner Jeffrey Soffer, the Miami developer behind Turnberry and the nearby Fontainebleau resort, and has since owned the unsold units.

Because CIM has not announced its future strategy, brokers who specialize in high-rise condos cannot gauge how the deal will affect the market.

“We don’t know yet if they will rent or sell, or what prices they will set if they sell,” said Diann Tonnesen, a broker at Prudential Americana Group.

For example, the Ogden downtown was converted to apartments a year ago, after it after it went into bankruptcy as a condo complex.

Real estate broker Bill Zinsser said he doubts the CIM deal would have much of an effect on other high-rise condos in the area.

“There isn’t any inventory besides the Martin and at CityCenter,” he said.

Many of the units were built as condo-hotels, which were to be rented out when the owners were not in residence. In these projects, such as Vdara, The Cosmopolitan of Las Vegas and Trump International, sales have been mostly or completely dropped in favor of operating unsold units as pure hotels.

On the west side of Interstate 15, the Martin still has 260 unsold units out of 372 as of Oct. 31. The Veer Towers in CityCenter have 443 units vacant out of 669. The nearby Mandarin Oriental has not sold 164 out of the original 227 condos, according to county records.

Although investors seeking bargains have played a major role in the Las Vegas residential real estate market the past couple of years, Ehrlich said this was likely the largest bulk purchase ever. While there have been larger deals, they involved taking over the loans of failed lenders.

Contact reporter Tim O’Reiley at
toreiley@reviewjournal.com or 702-387-5290.

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