NLV’s Park Highlands land auctioned for $21 million

STEVE MARCUS / LAS VEGAS SUN FILE

The vacant desert at left was to be developed as Park Highlands, a 2,675 acre community in North Las Vegas. Work began in 2007 with the expectation that people would begin moving in in 2008. This February, the projection for completion of the first homes was moved to 2010. Now, who knows?

Steve Marcus

The Park Highlands housing development in North Las Vegas has filed for Chapter 11 bankruptcy protection. The developers may be able to restructure their debt and resume building when the economy improves.

Everything right and everything wrong with the Southern Nevada residential real estate market was illustrated during a bankruptcy auction this week for 1,340 acres in the stalled Park Highlands planned community in North Las Vegas.

A consortium of out-of-state investors won Monday’s auction that lasted all day at the law offices of Greene Infuso LLP, with the winning bid submitted for $21 million at 7 p.m.

The good news: Rock-bottom raw land prices attracted a good number of potential bidders to the auction, just as low prices are driving strong sales of existing homes in the Las Vegas area. Five qualified bids were received in advance of the auction, an attorney said.

"It yielded a successful auction," Park Highlands attorney James Greene told a bankruptcy judge Tuesday, adding the $21 million was nearly $2 million higher than a recent appraisal for the land.

The bad news: The $21 million the land fetched illustrates drastic reductions in Las Vegas-area land values during the recession. Even with the $21 million exceeding the $15.2 million initially offered for the land as a "stalking horse" bid in July, the Park Highlands lenders owed $178.9 million are facing steep losses after splitting up the auction proceeds.

The auction was conducted after Park Highlands owner November 2005 Land Investors LLC filed for bankruptcy protection on July 6 – its second bankruptcy in two years.

November 2005 is controlled by Ross Perot Jr., who also has a development company in Dallas called Hillwood Communities.

A Hillwood affiliate participated in the bidding for the Park Highlands land Monday in which one Perot company would have bought it from another Perot company.

But the Hillwood affiliate dropped out of the bidding at $20.4 million. Banking giant Credit Suisse — a creditor of Park Highlands — then dropped out at $20.9 million.

The winning bid was submitted by a consortium of investors including Crescent Bay Holdings, which has offices in Scottsdale, Ariz.; and Laguna Beach, Calif.

It was joined by an investment fund called KBS Strategic Opportunity REIT; which is managed from Newport Beach, Calif.; as well as a company called EFK Holdings LLC, which is owned by investors Emil Khalili of Beverly Hills, Calif., and Steve Shokouhi of New York.

Crescent Bay officials were all smiles Tuesday after a hearing in U.S. Bankruptcy Court in Las Vegas during which Bankruptcy Judge Mike Nakagawa approved their plan to buy the Park Highlands acreage.

They said they recognize there’s little demand now for new homes in the Las Vegas area — meaning there’s no reason to start developing Park Highlands again right away.

But the Crescent Bay officials said that in the long run they’re bullish on the market and that they plan to spend 18 months to two years or longer working with the city of North Las Vegas on a new development plan for Park Highlands.

"We’ve done extensive research on the Las Vegas area and we think the recovery is coming sooner than is generally believed in the real estate community," said Geoff Beer, a principal at Crescent Bay.

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