Prominent Las Vegas office park faces cloudy future
New York-based investment firm Blackstone has been cutting its office portfolio in recent years, and it appears that the Hughes Center is among those properties on the chopping block.
The company recently stopped making payments on its $325 million loan for the property, a company official said, as it looks to focus on sectors such as multifamily and industrial real estate.
For anyone who has lived in the Las Vegas Valley since the 1990s, Hughes Center office park has been a much-desired address for businesses. It’s centrally located amid the shadow of the Strip, just south of Wynn Golf Club off Paradise Road.
One Las Vegas broker said that with more development of office properties near the 215 Beltway many tenants at Hughes Center are starting to “complain about access in and out there, especially with commutes from Summerlin and Green Valley.”
In February, commercial real estate brokerage Colliers International announced that it relocated from the Hughes Center to Narrative, a four-story, roughly 100,000-square-foot complex south of the 215 Beltway between Durango and Buffalo drives.
Blackstone said in a statement that its traditional office holdings now represent less than 2 percent of its portfolio, compared with more than 60 percent in 2007.
“This 2013 investment was substantially written down beginning three years ago, due to the headwinds facing U.S. traditional office,” according to the statement. “We continue to be big believers in Las Vegas as evidenced by the $20 billion of real estate we own in the city, 95 percent of which is concentrated in rental housing, industrial and hospitality/net lease.”
It noted that 80 percent of its global portfolio is “concentrated in industrial, rental, housing, hotels, lab office and data centers — sectors with exceptionally strong fundamentals.”
Last fall, Ofir Hagay, founder of Moonwater Capital, was in the process of making a bid to buy the Hughes Center. His group’s holdings include buildings from Town Square to Marnell Center.
“We did a very extensive due diligence, and we made the final decision,” Hagay said. “We really liked the property. We worked with experts, but the deal we signed with Blackstone, we couldn’t move forward with because the price we negotiated wasn’t justified. The last thing we hear two or three weeks later was they gave the keys to the lender. In other words, they defaulted on the loan.”
A Blackstone official said the property is not being sold, but the firm doesn’t rule out that a sale won’t happen.
Meanwhile, Hagay remains intrigued by the opportunity to once again pursue purchase of the Hughes Center.
“My group is very much interested to own the property,” he said.
This story has been updated to clarify Blackstone’s office portfolio.
Contact Dave Berns at dberns@reviewjournal.com. Follow @daveberns2 on Twitter.
