LVH hotel-casino in Las Vegas sold at foreclosure auction
The 2,973-room LVH hotel-casino in Las Vegas was sold during a foreclosure auction today. As expected, it was purchased by a joint venture between Gramercy Capital Corp. and Goldman Sachs Mortgage Co. LLC.
Goldman Sachs’ affiliates were both investors in and lenders to the old Las Vegas Hilton, now called the LVH or Las Vegas Hotel & Casino.
The property was foreclosed on after defaulting on its mortgage, which had a balance of $309.6 million as of Oct. 10.
The amount of the Gramercy/Goldman bid for the property wasn’t immediately disclosed, but it was likely a credit bid in which the mortgage amount due far exceeds the value of the property. The mortgage initially was for $250 million, but the amount owed grew with missed payments and interest.
No operational changes are anticipated in the short term, and the new owners have appointed experienced contract operator the Navegante Group of Las Vegas to run the property.
“The future is bright for the LVH on all fronts,” said Rick Stevens, chief operating officer of the Navegante Group, which said the sale ended uncertainties about the property.
Today’s sale capped a tumultuous 12 months for the Paradise Road property, which went into foreclosure proceedings last fall, early in the year lost its Hilton franchise and then was placed under control of a court-appointed receiver.
The receiver action was requested by Goldman Sachs after the owner at the time, Colony Resorts LVH Acquisitions LLC, defaulted on its mortgage after enduring steep losses during the recession.
Colony Resorts LVH was owned by a Goldman Sachs affiliate and Colony Capital LLC of Los Angeles, headed by investor Thomas Barrack. During court proceedings last year, Barrack made it clear Colony Capital wasn’t going to pump additional funds into the money-losing operation.
During recent talks with gaming regulators, Goldman Sachs officials said they had no immediate plans for changes at the property and would take some time to assess its operations. LVH officials have said “substantially all” of the LVH’s 2,200 employees would be rehired by the new owner.
“We want to express our appreciation to the Las Vegas community, state and local officials, vendors, governmental agencies and our employees for their cooperation enabling this transition to occur seamlessly,” Stevens said.
The LVH also noted in its statement that since entering the foreclosure process in September 2011, “the hotel-casino has continued to conduct business as usual and has successfully booked group and convention business for 2013 and beyond.”