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

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Located at Las Vegas Boulevard and St. Rose Parkway, severalmiles south of the Strip, the 11-story M Resort will have 390 roomsand suites; 90,000 sf of gaming space; 40,000 sf of meeting andconference facilities; a 20,000-sf spa; a 2.3-acre pool and eventsarea; a wine cellar and tasting room; a top-floor lounge and ninerestaurants. The structures, including a 2,000-slip parking garage,cover about 12 of 95 contiguous acres controlled by MarnellIII.

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The construction lender for M Resort, Spa and Casino is the Bankof Scotland plc, an Edinburgh-based commercial and clearing bankwith a history dating back to the 17th century. The generalcontractor is Marnell's father's design-build firm, Marnell CorraoAssoc., which built the Bellagio and Wynn Las Vegas casinos.

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

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In a recent filing with the SEC Taubman says it is negotiatingan agreement to provide initial leasing services for the mall at MResort and that an affiliate of the Taubman family is involved notonly in that portion of the project but also the plannedresidential portion of the project. Taubman currently is providingretail leasing services for MGM's $9-billion CityCenter developmenton the Strip under a 25-year fixed-fee contract. That massiveproject is on track to open all at once in late 2009.

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MGM, meanwhile, is a partner in M Resort by way of a$160-million subordinated convertible note it provided in April2007. The note matures eight years from its effective date andcontains certain optional and mandatory redemption provisions. MGMMirage has the right to convert the note into a 50% equity interestin the M Resort after 18 months of the note's issuance if notpreviously repaid. Marnell tells GlobeSt.com that MGM will indeedbe a 50-50 partner in the project by the time November rollsaround.

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In a conference call with analysts last week, Taubman CEO RobertTaubman spoke highly of the retail opportunity at M Resort. "Oursite is the epicenter of the Southern growth, which we expect tocontinue substantially over time," he said. "Also, the richestpeople in Las Vegas live in the nearby Anthem and SouthernHighlands communities. With the huge new international airport thatis planned to the south of us, this part of the I-15 corridor willlikely become the densest, most affluent market in Las Vegas withinthe next generation. We are in serious discussions with anchorstores and are hopeful that we can put all the pieces together overthe next year or so."

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That having been said, Taubman cautioned that the M Resortshopping mall is at this point only "a good story" and that thecompany needs to have a lot of good stories. "Unfortunately, we arenot going to be able to build them all," he says. "Some of themwill fall by the wayside."

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

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The developer filed for protection from creditors under Chapter11 of the US Bankruptcy Code in June, shortly after it was unableto come to terms with one of the lenders, Community Bank of Nevada,a subsidiary of publicly held Community Bancorp, which threatenedto initiate foreclosure proceedings. The bankruptcy filing ispreventing 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 courtdocuments.

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

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

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"Mr. Plise has the financial wherewithal to make a substantialcontribution to the Debtors reorganization, which will be essentialto a successful reorganization," states the filing. "The Debtorwill use the breathing space afforded it by the Bankruptcy Code tonegotiate with the lenders to obtain [longer term financing] on ago forward basis."

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A similar situation is occurring on the Strip. CityCenter, whichlike M Resort has the necessary cash and debt to complete itsproject, is on track for a late 2009 opening while the nearby$4-billion Echelon development by Boyd Gaming has hit the brakesmid-construction. For those stories, click on one of the headlinesbelow:

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