Las Vegas Losing Streak Continues
as Slowdown Hits Another Project

“The delay will allow our joint venture with General Growth Properties the opportunity to secure financing under more favorable conditions at a later date,” said Boyd Gaming in a written statement. “It also provides additional time for General Growth Properties, the High Street retail promenade, to take advantage of an improved leasing environment, once economic conditions moderate.”

By Tony Illia

Las Vegas’ luck is seemingly running dry as another mega-project slows construction. Chicago-based General Growth Properties recently announced its decision to delay opening its 107-acre "Summerlin Centre" mixed-use development in southwest Las Vegas by a year or more. The company is deferring approximately $500 million of worth development expenditures during the next 18 months. General Growth cited a souring economy, slow pre-leasing activity and waning consumer confidence for its decision.

The 1.6-million-sq-ft open-air complex of shops, restaurants, offices and residences at the southeast corner of Charleston Boulevard and Interstate 215 Beltway was originally scheduled to open in late 2009, with Crate & Barrel and Nordstrom as anchor tenants. Summerlin Centre's previous project timeline would mean opening with only 70% occupancy, which is 23% lower than General Growth's overall mall occupancy rate.

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"We're discussing new deals with retailers and many of them are cautious about making commitments," John Bucksbaum, chairman and CEO for General Growth, told investors.

General Growth is also a partner on Boyd Gaming's $4.8-billion, 5,000-room Echelon project on the Las Vegas Strip. It was announced earlier this month that the eight-building, 12-million-sq-ft. complex is being delayed by at least three quarters or more due to “weak economic conditions.” Boyd and General Growth were co-developing a $500-million, 300,000-sq-ft retail promenade called High Street inside the mega-resort. General Growth's cash contribution was $100-million to the 50/50 joint-venture mall.

“The delay will allow our joint venture with General Growth Properties the opportunity to secure financing under more favorable conditions at a later date,” said Boyd Gaming in a written statement. “It also provides additional time for General Growth Properties, the High Street retail promenade, to take advantage of an improved leasing environment, once economic conditions moderate.”

General Growth's stock has fallen nearly 50% from a year-ago level because of investors' concerns about the weakening retail market and the company's $18.4 billion in debt coming due in the next 3.5 years. The debt is mostly in mortgages tied to specific properties. General Growth has over 200 shopping centers in 45 states, including four in Las Vegas.

On August 5, General Growth's President and COO Bob Michaels sold 690,507 common shares at average price of $27.13, in order to cover a massive margin call, according to a Securities and Exchange Commission filing. It left Michaels, who joined the company in 1972, with 690,507 common shares.

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