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LAS VEGAS-The 255-room Platinum Hotel & Spa opened its doors for business last week as one of the first condo-hotels near the Las Vegas Strip. The $100-million project was 80% pre-sold when it received construction financing 20 months ago and sold out shortly thereafter.

The project includes a 16-story residential tower and a five-story, 238-slip parking garage on a two acre site at the intersection of Koval and Flamingo streets, one block east of the Bellagio, Bally’s and Caesars Palace casinos. The developer is a joint venture of Marcus Hotels & Resorts of Milwaukee and Chicago-based Diversified Real Estate Concepts.

Priced between $300,000 and $1 million, the units range from 911 sf to 2,166 sf and include a full kitchen, a balcony, a 42-inch HD plasma television, an oversized whirlpool bath, a fireplace, 24-hour room service, town car service and complimentary high-speed Internet access. Project amenities include a luxury spa; indoor and outdoor swimming pools; a 4,500-sf rooftop terrace overlooking the Strip; an upscale restaurant and bar, a poolside lounge and a lobby cafe.

Corus Bank provided the two-year construction loan in February 2005. Corus Bank SVP John Markowicz told GlobeSt.com at the time that while Corus finances many condominium projects, this is one of the first condo-hotel developments it has financed. “The strong level of pre-sales helped us become comfortable in advancing 90% of project costs,” he said.

Marcus Hotels and Resorts owns or manages 16 hotels, resorts and other properties. The company is currently restoring the historic Skirvin Hilton, a public/private historic hotel renovation project in Oklahoma City. Under the joint-venture agreement for Platinum, Marcus Hotels and Resorts and DREC oversaw construction management, with DREC is responsible for marketing the project and Marcus Hotels and Resorts responsible for operating the hotel.

Shortly after the project sold out last year, the Scottsdale, AZ-based National Association of Condo Hotel Owners issued a report on the Vegas condo-hotel market. The report analyzed the rental revenue that unit owners can realistically expect in the nation’s largest condo-hotel market. Nacho founder and chairman Dante Alexander told GlobeSt.com that Las Vegas, where 99% of hotel rooms are absorbed within three years, is close to being a break-even proposition, which is above average.

“Based on our assumptions, participating in the rental pool would allow some mitigation of costs and, in some cases, a modest income,” according to the analysis, which accounts for HOA fees, management and administrative fees, property taxes, repair and replacement reserves, and added liability insurance costs were included. Mortgage interest costs were not included. “Owners should not expect much, if any, of their mortgage interest to be covered by their share of the rental income from the unit,” according to the report.

What wasn’t made clear in the report is how the units will increase in value on a re-sale basis. “The unknown continues to be projecting appreciation rates,” stated the report. “Typically much can be determined by analyzing historic growth of pure residential condominium in an area; unfortunately, there has been little precedent of comparable pure condominium on or just off the Strip.”

There will be in the coming years, however; according to Smith Travel, Las Vegas is the largest condo-hotel market in the country with some 28,288 condo hotel units in the development pipeline. The first condo-hotel development in the city–the 575-unit Tower A of the three-tower, 1,725-unit Signature at MGM Grand–sold out in less than 60 days, according to Nacho. Since that time, the second tower also has been sold out and the third tower is 75% sold, according to local sources, and construction has begun on the 1,300-room Trump International (condo) Hotel, which is expected to open in 2008.

According to Lodging Econometrics, there currently are 74 condo hotels under construction nationwide. Another 45 condo-hotels are expected to go under construction in the next 12 months, and 39 are in the early planning stage.

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