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LAS VEGAS-Investor-developer Mike J. Mona Jr.’s two-for-one motel deal appears to be getting some attention in these depressed times. Previously listed for $45 million and $9.3 million, the merchant builder is now asking $44.5 million or $92,000 per unit for a 483-unit pair of Emerald Suites-branded extended-stay motels he completed here in 2001.

When the marketing campaign started a few weeks ago Barbagallo sent flyers to more than 350 investors of Las Vegas real estate that own apartment complexes and hotels and motels, and was working on a mailing to timeshare developers. This week, he says interest has been relatively high, and that a few just-in-case verbal low-ball offers have been made since the listing went live.

“Yesterday alone we had three inquiries and this morning two,” Barbagallo says. “The owner is not in trouble with the property, not desperate to sell, but is willing to negotiate. He’s a merchant builder who wants to move onto the next project. We’re just looking for someone to give us a reasonable offer and we will consider it.”

The Emerald Suites on Las Vegas Boulevard is a 387-unit, two-story development on 7.75 acres. Rents range from $880 to $925 per month. Barbagallo says it may be of interest to timeshare investors due to its location near Grandview, a timeshare development next to the South Point Hotel-Casino that he says has sold well.

The other property, Emerald Suites on Cameron Street, is a 96-unit development on 2.3 acres next to the Orleans Hotel & Casino. Unlike the other property, this one looks more like an apartment complex than a hotel. Rents range from $800- to $900 per month.

Both properties are currently being operated as extended-stay hotels, not apartment buildings. The property near South Point, listed for $36 million or $93,023 per unit, is running at approximately 50% occupancy. The property next to the Orleans is running at approximately 70% occupancy and listed for $8.5 million or $88,542 per unit.

Several fourth quarter Las Vegas apartment market reports showed an average occupancy of approximately 92% in the final three months of the year, with the fourth quarter coming in below the average. Predictions as of February were for rents to decline and average vacancy and concessions to trend higher through the first three quarters of 2009.

Assuming 90% occupancy as fully-furnished extended-stay apartment units, listing agent Al Barbagallo of Grubb & Ellis tells GlobeSt.com the cap rate for the package is 5.7%. That is based on $2.58 million in annual NOI for the Las Vegas Boulevard property and $643,173 of annual NOI on the smaller property.

Comps are hard to come by. There has been only one apartment sale in Las Vegas in 2009, according to Real Capital Analytics. That property, Woodcreek Villas, a 75-unit property built in 1988 southeast of McCarran International Airport, sold for $7.5 million or $100,000 per unit in February, which is on par with the national per-unit average in 2008, according to RCA. No cap rate was listed.

Nationally, average cap rates over the past 12 months are in the high 6% range, with Seattle and Los Angeles averaging in the mid 5% range, San Francisco in the mid-6% range and Denver in the low 7% rage.In Las Vegas, apartment cap rates in 2008 increased just 38 basis points to 5.39%, according to CB Richard Ellis. The downside, it said, is that the spread between buyers’ and sellers’ cap rate expectations remains significant. Few transactions are being completed as a result.

“For those transactions that are completed we expect that cap rates will rise significantly over 2008 levels due to the increasing cost of debt and equity,” concludes CBRE in its report. “The loan constant of the cost of debt will be a minimum bench mark for cap rates in 2009.”

Several fourth quarter Las Vegas apartment market reports showed an average occupancy of approximately 92% in the final three months of the year, with the fourth quarter coming in below the average. First quarter reports have not yet been released but predictions as of February were for rents to decline and average vacancy and concessions would trend higher through the first three quarters of 2009.

Spence Ballif, a Las Vegas apartment broker with CBRE told GlobeSt.com recently that investors and developers in Las Vegas are hoping the additional rental demand created by the thousands of new jobs at City Center, Fontainebleau this year and Cosmopolitan next year will help stabilize the apartment market. Those three projects account for the bulk of the 16,000 rooms on track to open this year and next, on top of 8,000 in 2008. An estimated 10,000 people will work at CityCenter, which scheduled to open 6,000 rooms in the fourth quarter in addition to hundreds of condominiums and 500,000 square feet of retail.

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