April 07, 2008
Las Vegas Business Press
Corus faces high exposure from local condo loans
BY TONY ILLIA
Corus Bankshares, a Chicago-based lender responsible for $360 million in Las Vegas condominium-project loans last year, now faces high financial risk from the market's dramatic downturn. The firm has bet almost exclusively on luxury condominiums, with a $4.34 billion loan portfolio at the end of 2007. Corus' fourth-quarter earnings were $1.9 million or 96 percent less than the previous year.
"Continued weakness in the housing and mortgage markets, combined with a general slowdown in the economy, has resulted in a significant decline in Corus' 2007 earnings," Robert Glickman, the company's president and chief executive officer, said in a statement. "This is clearly the worst quarter we have seen in many, many years."
Southern Nevada accounts for 6 percent of the company's total loan exposure. Corus (ticker: CORS, Nasdaq National Market) has provided loans to several Las Vegas high-rise projects, including $123.1 million to the 21-story, 275-unit Streamline Tower at Las Vegas Boulevard North and Ogden Avenue; $120 million to the 33-story, 326-unit Panorama Tower II at Dean Martin Drive and Harmon Avenue; and $106.2 million to the 15-story, 341-unit Juhl at 255 Bonneville Avenue in downtown Las Vegas.
Federal regulators have increasingly warned banks about their exposure to commercial real estate construction and development loans. Corus Bankshares could consequently become the poster child of the condo bust.
As of Dec. 31, $286.6 million in condo loans were more than 90 days past due and had stopped accruing interest, representing a fourfold increase from
the previous year. Although the company still has enough cash on hand to cover its bets, the worst is yet to come. Corus faces further regulator scrutiny in coming months along with fallout from dozens of teetering
projects, analysts say. The lender could write down as much as $77 million in loans this year, up from $40 million in 2007.
"The market remains in the midst of a rebalancing from an overheated demand profile to a skeptical consumer perception," said Brian Gordon, a principal with Applied Analysis, a Las Vegas-based financial consulting firm. "We believe end-users will ultimately dictate demand within the luxury condo sector and normalized conditions will prevail over the next several years."
PROJECTS
Ninyo & Moore performed a geotechnical design evaluation for the $14 million Sunset Regional Park project at the southeast corner of Eastern Avenue and Sunset Road in Las Vegas. The project's current phase calls for upgrading a 25-acre portion of the 324-acre park, including construction of an events plaza, parking areas, restrooms and landscaping. The first phase of construction is scheduled to begin later this year.
D&K Landscape recently completed $1.9 million worth of landscaping at The Arroyo Market Square at the Las Vegas Beltway and Rainbow Boulevard in Las Vegas. The work consisted of creating palm-lined entryways and landscaped medians with agave, desert-friendly trees and water-smart flora. Laurich Properties and EJM Development Co. jointly developed the $150 million, 90-acre power retail center, consisting of 945,000 square feet of big-box stores, junior anchors, multi-tenant pads, inline space and stand-alone restaurants. Roche Constructors was the project's general contractor; Perkowitz+Ruth
was the architect.
MILLION-DOLLAR DEALS
State of Nevada, Department of Administration, Division of Buildings and Grounds signed a seven-year, $1.93 million lease for 12,791 square feet of office space at 9890 S. Maryland Parkway in Las Vegas. CB Richard Ellis' Brad Peterson represented the lessor, Silverado Ranch LLC. The reported average rent equals $1.79 per square foot.
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro LLP signed a five-year, $1.43 million lease for 7,361 square feet of office space inside Hughes Center at 3453 Howard Hughes Parkway in Las Vegas. CB Richard Ellis' Brad Peterson represented the tenant. The reported average rent equals $3.24 per square foot.
RMCC Cancer Center signed a five-year, $1.34 million lease for 9,625 square feet of office space at 1505 Wigwam Parkway in Henderson. CB Richard Ellis' Carla Cole represented the lessor, Wild West Investment Partners. The reported average rent equals $2.32 per square foot.
Qdoba signed a 10-year, $1.04 million lease for 2,364 square feet of retail space inside McCarran Market Place at the southwest cornerof Russell Road and Eastern Avenue in Las Vegas. NAI Horizon's Dave Johnson and Phillip Baca represented the lessor, McCarran Market Place LLC, and Voit Commercial's Tami Lord represented the tenant. The reported average rent equals $3.68 per square foot.
tonyillia@aol.com
303-5699
