City Center West is located at 7201 W. Lake Mead Blvd., which is near the master-planned community of Summerlin on the west side of the Las Vegas Valley. The building was built in 1998 by Pauls Corp. of Denver. The building last traded in 2005 for approximately $30 million. An identical neighboring building traded in 2006 for approximately $35 million.
Based on the property's projected year-one NOI, the latest transaction represents a capitalization rate of approximately 6.5%. The $325 per-sf price is at or just below replacement cost, according to CBRE broker Christina Roush of Las Vegas, who with Kevin Shannon of CBRE in Los Angeles had the disposition assignment.
The largest tenant in the building is Citadel Broadcasting, which occupies 14,000 sf. Other tenants include First American Title (4,400 sf), AG Edwards (4,819 sf) and Safeco Insurance (3,000 sf). There is no significant near-term vacancies looming, according to sources familiar with the building.
Roush tells GlobeSt.com that the property was put under contract in August. The closing was delayed until now due to a problem getting the loan assumed. The $21-million loan, which represents approximately 60% of the acquisition cost, was ultimately assumed. Roush didn't know why this loan assumption was prolonged but said that in many cases banks are using assumptions as an opportunity to renegotiate deal terms.
Buyers are also looking to lower their risk. Roush, which is marketing several properties, says there is a bid-ask gap of between 50 and 100 basis points on the cap rate. "Investors are having trouble buying because of the capital markets, which is forcing them to compile more equity for deals," she says says. "Buyers want a discount for the fact that they can't get better leverage and sellers feel it's not time to drop pricing because they think the market will turn around."
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