CIM Group -- they are an "interesting" bunch. Sounds like they lost a bundle on this one. Actually... it seems that the California Pension Funds like CALSTRS and CALPERS (who fund CIM Group) ended up losing the money. But I'm sure CIM Group has sent them a nice report that explains it all in nice terms like -- "we mitigated our losses... blah blah blah".
Not really, they purchased the property for $20.4 million which is a tiny fraction of the huge sums of money that many people lost in Vegas. It's a pretty big investment firm, so I am sure this was a fairly small hitch in their plans.
As recently as December, they were still publicly making plans for the property.
Quote: CIM Group Press Release
CITY OF LAS VEGAS AND CIM GROUP AGREE TO REVISE DEVELOPMENT PLAN FOR VICINITY OF HISTORIC POST OFFICE BUILDING
Dec 15, 2010
LAS VEGAS - December 15, 2010-The Las Vegas City Council today approved an Amended and Restated Disposition and Development Agreement with CIM Group for a re-scaled development on land surrounding the historic Post Office Building on Stewart Avenue in the downtown district. The agreement keeps an important project in the ongoing downtown revitalization moving forward. Under the revised agreement, the project will encompass a minimum of 80,000 square feet of retail space and 15,000 square feet of meeting space, while also providing for surface parking.
The revised agreement is an important step toward achieving the City and CIM Group's mutual goal of creating a substantial, high-quality development that further enhances the downtown district. The new retail plan is designed to address significant changes in the vicinity of the project as well as changes in macro-economic conditions since the original agreement was reached in July 2008.
With the Mob Museum set to open as the centerpiece of the area's redevelopment by the end of 2011, both the City and CIM Group sought to revise the agreement so as to better support the Museum as a destination and thereby attract new visitors. The new agreement also includes a modification of the financial structure between CIM Group and the City.
The Post Office Block development still requires the approval of a master plan by the General Services Administration, which holds deed restrictions to a portion of the land in the project. Current plans for the project call for an opening in 2013.
Perhaps the fact it has moved from an investment company to a gaming company will help.
These tremendous sums of money the investment companies dumped into the properties seem like they guaranteed failure. The business model they worked with in downtown since the early 1990's was to expect less revenue every year, and invest in efficiencies to operate with fewer and fewer people and more efficiency to maintain profits. Of course the City was not happy with that model, since they want tax revenues like the strip.
So they wold the companies, Plaza. etc. to Tamares, Golden Nugget to Landry's, Stratosphere to Goldman Sachs, Lady Luck to CIM, etc. They now have these huge loans, and revenue is plunging. Boyd downtown is doing fine, not spectacularly, but fine. They have been able to cut costs so that they are more profitable than before the recession. But they did not sell the property, and they have no huge finance costs. Now if only they had kept the Stardust.