San Diego investors have scooped up dozens of units in a north Strip residential tower in the valley’s latest bulk condo purchase.
Pathfinder Partners, which buys boom-era properties that ran into problems after the economy tanked, paid about $18.1 million for 64 units in Sky Las Vegas.
The cash deal closed Sept. 10.
A 45-story luxury high-rise, Sky is across the street from the mothballed Fontainebleau resort. Pathfinder picked up the remaining units that never sold after the 409-unit tower opened in 2007.
The units, along with empty commercial space on the second and third floors of Sky, were listed for sale in April at a price of “best offer.” Pathfinder did not buy the commercial space, which totals about 28,600 square feet.
Sky, 2700 Las Vegas Blvd. South, has concierge service, valet parking, indoor racquetball, billiards, a putting green and a dog run.
The bulk deal is Pathfinder’s first acquisition in Las Vegas, co-founder Lorne Polger said, but perhaps not its last. Pathfinder is under contract for another residential acquisition here, but Polger declined to give details.
Polger said he’d “been looking for nine years” to do a deal in the valley, though despite making offers on properties, he “never finished first.”
He said his units at Sky are being rented, and as their leases expire, his group will renovate them. He wants to sell them, “most likely” starting next year, but he doesn’t plan to list them all at once, which could push down prices on himself.
Potential buyers include investors, full-time residents and people who use the condos as crash-pads for Las Vegas getaways.
He did not say what the asking prices might be, but he said the market is improving, and he noted that condo towers aren’t being built in Las Vegas, limiting his competition.
Moreover, bulk purchases in high-rises don’t come along every day.
“There aren’t too many of these opportunities left, frankly,” Polger said.
A former real estate lawyer who helped launch Pathfinder in 2006, Polger said his group owns more than 3,000 rental units. He said the company focuses on projects that were “built at the height of the cycle” and slid into “troubled situations.”
“Sky kind of fits that bill,” he said.
Sky’s developers, M. Aaron Yashouafar and David Pourbaba, never lost their project to foreclosure. But sales volume and prices fell sharply after the bubble burst.
They sold about 300 units in 2007 alone, then just 22 from 2008 through 2014, an average of about three per year, Clark County records indicate.
Meanwhile, Pathfinder paid about $190 per square foot for its units; by comparison, some buyers paid in the range of $600 and $700 per square foot for condos there before the market collapsed.
“We feel pretty good,” Polger said.
For several years, the north Strip has had less foot traffic and commerce than other parts of the resort corridor, due in no small part to abandoned, partially built resorts and large swaths of empty land where other projects never materialized.
But now, with projects opening and in the pipeline, the area seems poised to rebound.
Construction doesn’t appear to have made much progress at Resorts World Las Vegas, but owner Genting Group, a Malaysian casino powerhouse, says it plans to spend billions transforming the once-mothballed Echelon project into an 87-acre Chinese-themed megaresort.
Also, across the street from SLS, investors opened a 33-acre outdoor festival grounds in May. The first event there was concert series Rock in Rio USA.
“It’s perfect market timing for Lorne,” said CBRE Group broker Charles Moore, who represented Sky’s developers in the sale.
Other buyers have gobbled up large quantities of condos in the past few years. As with Sky Las Vegas, the buildings opened as for-sale condo complexes but, after the recession hit, units were rented out.
Investors bought 427 units at Veer Towers on the Strip in late 2012 for $119 million cash. A year later, investors bought units at the Ogden and Juhl — two downtown high-rises — as well as One Las Vegas, Loft 5 and Spanish Palms Condominiums for $237 million combined.
The bulk sale at Veer amounted to about $300 per square foot, roughly 58 percent higher than Pathfinder’s purchase. Veer, however, is in the heart of the Strip, surrounded by shopping and resorts.
Amenities near Sky include the tower’s ground-floor CVS drugstore, Moore said. And as CBRE broker Marlene Fujita, who worked with Moore on the sale, pointed out, the building has an unsightly neighbor.
“You can’t help but look out Sky and look at Fontainebleau,” she said.