The District sold at auction for $50 million

The District at Green Valley Ranch has been sold at public auction for $50 million, another casualty of the faltering commercial real estate market in Las Vegas.

The mixed-used development by American Nevada Co. was sold on Jan. 19 to Village Walk LLC, a Nevada limited liability company with a mailing address in Miami Beach, Fla., according to documents filed with the Clark County Recorder.

Attempts to reach American Nevada and Village Walk were unsuccessful.

The property went into default last year and a notice of trustee's sale was recorded on Nov. 10. First American Title served as trustee for the seller.

The District joins other high-profile commercial properties in Las Vegas that have gone into default or foreclosure, including Town Square, Boca Fashion Village and land once planned for the Great Mall of Las Vegas.

The $50 million high bid for The District will be applied as partial satisfaction of the debt secured by the deed of trust.

American Nevada, developer of the Green Valley master-planned community, developed the 25-acre first phase of The District in 2004 with a mix of retail, office and 88 loft-style condos as an extension of Green Valley Ranch Resort in Henderson. A second phase was developed with 50,000 square feet of office space over retail. Among the tenants were Whole Foods and Cheesecake Factory.

Real estate analyst John Restrepo of Restrepo Consulting Group said many of the condominiums were sold to "insiders" with American Nevada, founded by the Greenspun family. At about $500 a square foot, the condos were priced far above the Las Vegas median. Several condos are now being listed as foreclosures.

The open-court, pedestrian-oriented District was built during the boom period in Las Vegas when the "flavor of the month" was new urbanism development, Restrepo said. Many of the projects, such as Town Square and The District, were funded through unprecedented access to capital, he said.

"There was so much capital flowing into real estate that all projects were considered good projects, no matter if they had sound fundamentals, as long as they could get the money," Restrepo said. "In a normal capital market, when you try to create an urban environment in a suburban location, it probably would not have been funded. The District was a product of the time."

Many commercial projects built during the "perfect storm" in Las Vegas have gone into default, victimized by falling real estate values, rising vacancy and reduced net operating income.

Turmoil continues to ripple through the commercial real estate market, attorney Abran Vigil of law firm Ballard Spahr said. Office and retail building owners depend on tenants to pay the rent, and tenants depend on the economy for business, he said.

Some developers have been able to stave off foreclosure through loan modifications and workouts with lenders, hoping to survive until cash flow improves or debt can be refinanced.

"A lot of times we see a (debt) maturity date come up and they kick it back a few years," Vigil said at a seminar on workouts, foreclosures and bankruptcies. "They're splitting the note into an A note and B note, restructuring it so ultimately you get the full balance paid back."

John Taylor, director of corporate services for Commerce Real Estate Solutions, said banks and special servicers, or third-party companies that handle loans in default, have been proactive in reaching out to borrowers.

"They haven't worked through all the loans yet," he said. "There's still a little ways to go to the bottom. Certain markets have bottomed out, but I don't think that's happened in Vegas."

Many of the people posting reviews of The District on www.yelp.com said they liked the dining and entertainment, but felt the shopping was a little on the high-end side.

"Not much to do in The District," Alma of Las Vegas said. "It does have the stores, none of which are really my taste. Living in the southwest area, I don't find it worth it to drive all the way down there unless I'm eating at Lucille's. The one good thing I will say about it is that it looks pretty, especially at night. If I am on that side of town, it's nice to sit outside drinking coffee (given that the weather is bearable)."

Among the restaurants getting good reviews are Elephant Bar, Lucille's Barbecue, Crazy Pita, Balboa's Pizza Kitchen and PF Chang's. Retailers at The District include Williams Sonoma, Anthropologie, Pottery Barn, Ann Taylor Loft, REI, Brookstone and Hallmark.

Restrepo said "conventional wisdom" in Las Vegas was that land prices were on a permanent upswing, requiring an immediate transition to high-density, mixed-use development. Projects such as The District could be "manufactured," rather than emerging organically as they did in Portland, Ore., San Francisco and the East Coast. That was compounded by popularity of the Las Vegas "brand," which attracted an unprecedented amount of investment to the region, as well as cheap and easy credit, he said.

"So now we know that much of the demand we saw for real estate during Las Vegas' boom was artificial and unsustainable." Restrepo said. "That is to say, it wasn't based on an appreciation of the inevitable market cycle and sound supply-demand assumptions."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.