"Some projects now in turmoil were started with corporate revolvers; it was assumed that financing would be available at a later date and then the market fell apart and the revolvers ran out or were running out,[forcing the projects were canceled or put on hold]," Marnell III says. "We weren't in that position; we're not a big corporation, we didn't have a revolver so we needed everything in place to get started."

Located at Las Vegas Boulevard and St. Rose Parkway, several miles south of the Strip, the 11-story M Resort will have 390 rooms and suites; 90,000 sf of gaming space; 40,000 sf of meeting and conference facilities; a 20,000-sf spa; a 2.3-acre pool and events area; a wine cellar and tasting room; a top-floor lounge and nine restaurants. The structures, including a 2,000-slip parking garage, cover about 12 of 95 contiguous acres controlled by Marnell III.

The construction lender for M Resort, Spa and Casino is the Bank of Scotland plc, an Edinburgh-based commercial and clearing bank with a history dating back to the 17th century. The general contractor is Marnell's father's design-build firm, Marnell Corrao Assoc., which built the Bellagio and Wynn Las Vegas casinos.

The entire property is entitled for 6,000 hotel, condo and condo-hotel units and upwards of 1 million sf of retail. The retail, a big chunk of which would be built atop the parking structure, is much further along than any additional hotel or condominium units. A 14-screen, 63,000-sf upscale movie theater is slated open by the end of 2009 atop the parking garage, and Marnell III and Taubman recently signed a letter of intent to jointly develop a 1.3 million-sf, department store-anchored high-end shopping mall that would open in late 2011 or early 2012.

In a recent filing with the SEC Taubman says it is negotiating an agreement to provide initial leasing services for the mall at M Resort and that an affiliate of the Taubman family is involved not only in that portion of the project but also the planned residential portion of the project. Taubman currently is providing retail leasing services for MGM's $9-billion CityCenter development on the Strip under a 25-year fixed-fee contract. That massive project is on track to open all at once in late 2009.

MGM, meanwhile, is a partner in M Resort by way of a $160-million subordinated convertible note it provided in April 2007. The note matures eight years from its effective date and contains certain optional and mandatory redemption provisions. MGM Mirage has the right to convert the note into a 50% equity interest in the M Resort after 18 months of the note's issuance if not previously repaid. Marnell tells GlobeSt.com that MGM will indeed be a 50-50 partner in the project by the time November rolls around.

In a conference call with analysts last week, Taubman CEO Robert Taubman spoke highly of the retail opportunity at M Resort. "Our site is the epicenter of the Southern growth, which we expect to continue substantially over time," he said. "Also, the richest people in Las Vegas live in the nearby Anthem and Southern Highlands communities. With the huge new international airport that is planned to the south of us, this part of the I-15 corridor will likely become the densest, most affluent market in Las Vegas within the next generation. We are in serious discussions with anchor stores and are hopeful that we can put all the pieces together over the next year or so."

That having been said, Taubman cautioned that the M Resort shopping mall is at this point only "a good story" and that the company needs to have a lot of good stories. "Unfortunately, we are not going to be able to build them all," he says. "Some of them will fall by the wayside."

While M Resort chugs toward completion, a nearby $2-billion, 126-acre mixed-use project in Henderson by an entity of Plise Development was halted right as it was going vertical for the first phase, an eight-story, 215,000-sf office building, 184 apartments, a 160-room boutique hotel and 175,000 sf of retail space. The general contractor is Chaparral Contracting, a Plise subsidiary.

The developer filed for protection from creditors under Chapter 11 of the US Bankruptcy Code in June, shortly after it was unable to come to terms with one of the lenders, Community Bank of Nevada, a subsidiary of publicly held Community Bancorp, which threatened to initiate foreclosure proceedings. The bankruptcy filing is preventing foreclosure while City Crossing refinances its debt, which matured on April 1 and totals approximately $168 million, including $26 million from Community Bank, according to court documents.

The debt was obtained for the land associated with the project, according to court documents. In seeking approval to enter Ch. 11 bankruptcy, City Crossing LLC says that given the financial wherewithal of William Plise, who personally guaranteed the debt, and the existing equity in the land--it was valued at $240 million in April—-its reorganization and the completion of the project is highly likely.

In explaining the predicament, the City Crossing bankruptcy filing states that short-term loans were a reliable way to finance development projects prior to the onset of the mortgage crisis. In essence, short-term loans could be refinanced on a yearly basis, which permitted the developer to tap into the equity in the underlying real estate and obtain favorable interest rates, according to the filing. In the current environment, the developer needs to replace its short-term financing with longer-term loans that will permit it to complete the project without seeking further financing.

"Mr. Plise has the financial wherewithal to make a substantial contribution to the Debtors reorganization, which will be essential to a successful reorganization," states the filing. "The Debtor will use the breathing space afforded it by the Bankruptcy Code to negotiate with the lenders to obtain [longer term financing] on a go forward basis."

A similar situation is occurring on the Strip. CityCenter, which like M Resort has the necessary cash and debt to complete its project, is on track for a late 2009 opening while the nearby $4-billion Echelon development by Boyd Gaming has hit the brakes mid-construction. For those stories, click on one of the headlines below:

Instant Insights /

Full Steam Ahead for $700M Resort-Casino

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