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Corus faces high exposure from local condo loans
April 07, 2008 - Corus Bankshares, a Chicago-based lender responsible for
$360 million in Las Vegas condominium-project loans last year, now faces high
financial risk from the market's dramatic downturn. The firm has bet almost
exclusively on luxury condominiums, with a $4.34 billion loan portfolio at the
end of 2007. Corus' fourth-quarter earnings were $1.9 million or 96 percent less
than the previous year.
"Continued weakness in the housing and mortgage markets, combined with a general
slowdown in the economy, has resulted in a significant decline in Corus' 2007
earnings," Robert Glickman, the company's president and chief executive officer,
said in a statement. "This is clearly the worst quarter we have seen in many,
many years."
Southern Nevada accounts for 6 percent of the company's total loan exposure.
Corus (ticker: CORS, Nasdaq National Market) has provided loans to several Las
Vegas high-rise projects, including $123.1 million to the 21-story, 275-unit
Streamline Tower at Las Vegas Boulevard North and Ogden Avenue; $120 million to
the 33-story, 326-unit Panorama Tower II at Dean Martin Drive and Harmon Avenue;
and $106.2 million to the 15-story, 341-unit Juhl at 255 Bonneville Avenue in
downtown Las Vegas.
Corus has also made loans to such projects as the 20-story, 359-unit One Las
Vegas at Las Vegas Boulevard South and Shelbourne Avenue; and the 23-story,
168-unit Newport Lofts at Casino Center Drive and Hoover Avenue.
Federal regulators have increasingly warned banks about their exposure to
commercial real estate construction and development loans. Corus Bankshares
could consequently become the poster child of the condo bust.
As of Dec. 31, $286.6 million in condo loans were more than 90 days past due and
had stopped accruing interest, representing a fourfold increase from the
previous year. Although the company still has enough cash on hand to cover its
bets, the worst is yet to come. Corus faces further regulator scrutiny in coming
months along with fallout from dozens of teetering projects, analysts say. The
lender could write down as much as $77 million in loans this year, up from $40
million in 2007.
"The market remains in the midst of a rebalancing from an overheated demand
profile to a skeptical consumer perception," said Brian Gordon, a principal with
Applied Analysis, a Las Vegas-based financial consulting firm. "We believe
end-users will ultimately dictate demand within the luxury condo sector and
normalized conditions will prevail over the next several years."
Projects
Ninyo & Moore performed a geotechnical design evaluation for the $14 million
Sunset Regional Park project at the southeast corner of Eastern Avenue and
Sunset Road in Las Vegas. The project's current phase calls for upgrading a
25-acre portion of the 324-acre park, including construction of an events plaza,
parking areas, restrooms and landscaping. The first phase of construction is
scheduled to begin later this year.
D&K Landscape recently completed $1.9 million worth of landscaping at The Arroyo
Market Square at the Las Vegas Beltway and Rainbow Boulevard in Las Vegas. The
work consisted of creating palm-lined entryways and landscaped medians with
agave, desert-friendly trees and water-smart flora. Laurich Properties and EJM
Development Co. jointly developed the $150 million, 90-acre power retail center,
consisting of 945,000 square feet of big-box stores, junior anchors,
multi-tenant pads, inline space and stand-alone restaurants. Roche Constructors
was the project's general contractor; Perkowitz+Ruth was the architect.
Million Dollar Deals
State of Nevada, Department of Administration, Division of Buildings and Grounds
signed a seven-year, $1.93 million lease for 12,791 square feet of office space
at 9890 S. Maryland Parkway in Las Vegas. CB Richard Ellis' Brad Peterson
represented the lessor, Silverado Ranch LLC. The reported average rent equals
$1.79 per square foot.
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro LLP signed a five-year, $1.43
million lease for 7,361 square feet of office space inside Hughes Center at 3453
Howard Hughes Parkway in Las Vegas. CB Richard Ellis' Brad Peterson represented
the tenant. The reported average rent equals $3.24 per square foot.
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