National real estate brokerage and advisory firm Grubb & Ellis Co. on Wednesday said it was hired by banks to promote the Dec. 12 bankruptcy auction of 1,340 acres of land in the undeveloped Park Highlands planned community in North Las Vegas — one of the largest such auctions locally in years.
Banks, which face steep losses on their $178.9 million in loans to the Park Highlands developers, are trying to gain a better price than the $15.2 million initially offered for the land by an affiliate of the current land owner. The current land owner is bankrupt Park Highlands development company November 2005 Land Investors LLC.
Lenders and investors in Park Highlands both face losses because the recession has slashed Las Vegas-area land values and there’s little demand by homebuilders for the land, compared to the strong demand during the economic boom years.
Grubb & Ellis on Wednesday said portions of the Park Highlands land are zoned for residential, retail, resort, business and office use.
Grubb & Ellis said land sales in the Las Vegas area during the past 12 months for parcels 30 acres and larger have sold for a median price of $98,000 per acre and a high of $167,000 per acre — amounts far higher than what has been proposed so far for the Park Highlands land.
The initial offer for the land to be auctioned during the bankruptcy process came in at only about $11,343 per acre.
The initial offer was made in the bankruptcy case of November 2005 Land Investors but was later withdrawn when the banks complained it appeared to be a sweetheart insider deal in which one Ross Perot Jr. company would acquire the land from another Ross Perot Jr. company.
Perot Jr. has a development company in Dallas called Hillwood Communities.
In December, a Hillwood affiliate acquired November 2005 Land Investors a few months after November 2005 emerged from its 2009 bankruptcy, which was blamed on the near collapse of the local housing market because of the recession.
November 2005 Land Investors then filed for bankruptcy a second time in July.
Some of the banks are now litigating with one of the Perot Jr. companies, BOH Park Highlands NV LP, in a dispute over whether the buyer of the Park Highlands land at auction is obligated to pay $3.2 million BOH Park Highlands NV claims to be owed for infrastructure costs at Park Highlands incurred before the first bankruptcy by a predecessor company.
The banks dispute that money is due BOH Park Highlands and charged in a Bankruptcy Court lawsuit Oct. 24 that: “The threat of action by BOH against the purchaser of the property is chilling and will continue to chill bidding on the property because prospective third party purchasers fully expect to be able to buy the property free and clear of all liens and will not be enthusiastic about embracing litigation with BOH.”
Attorneys for BOH, in responding to the complaint Oct. 27, denied that its claim for the $3.2 million is chilling the bidding and said the real issue is that any party buying the land will have a choice to either assume Park Highlands’ infrastructure funding obligations or to pay BOH its $3.2 million.
BOH attorneys said there’s “no negative impact on the bidding process” since the total purchase price for the property would be the same under either scenario. The only difference is whether the lenders or BOH receive the initial $3.2 million of the purchase price, they said.
A Nov. 10 hearing is set on this dispute.
Outside of the courtroom disputes, Grubb & Ellis is hoping to attract attention to the Park Highlands development opportunity. The banks hope to lose less money by boosting the price of the land at the auction.
“This undeveloped property is the only parcel of land of its size available for purchase in greater Las Vegas and the outcome of this auction will have a significant impact on the future growth of the region,” said Curt Allsop, a Grubb & Ellis senior associate.