What’s Happening in Las Vegas?

Commercial Observer (April 4, 2020) One would be willing to wager that Las Vegas, a town that lives and breathes hospitality, would be doomed in a total shutdown from a global pandemic. But, as it turns out, that’s a sucker bet. In a city that likes the gamble, a number of the major Las Vegas property owners and investors have been more conservative than in the past, establishing a position to ride out a temporary shutdown. Partly because of the lessons from the Great Recession in 2008, which was agonizing for Sin City, the top players have made safer bets and built larger chip stacks to last through a cold deck. Some sectors outside the strip will surely still take big hits, and there is a complex mess to untangle. Mark Nicoletti, partner at Allen Matkins, has a client with three office properties in Las Vegas. He said when Nevada Gov. Steve Sisolak issued a moratorium on evictions, his client received notices from every tenant that they will not pay rent. They’re leveraged with a CMBS loan and a balance sheet loan. “There’s no moratorium on lenders collecting, so it’s becoming very difficult to figure out exactly what is going to happen,” he said. “Our best bet is that lenders are going to have to take all of this into consideration or the Fed is going to have to come download and impose some legislation…All of the sudden, come mid-April, almost every bank is going to have underperforming or defaulted properties which creates a reserve problem.” Read More (subscription required)