Plaza Las Vegas project moves forward (UPDATED)

By Liz Benston

Wednesday, March 19, 2008 | 4 p.m.

Plaza Las Vegas developer Miki Naftali of El Ad Group has denied a report in the Israeli publication Yediot Ahronot that the $6 billion Strip resort has been put on hold because of the credit crisis.

“We are forging ahead as planned” on the Plaza, Naftali said in a statement.

The Clark County Commission today approved permits for the Plaza, which submitted plans for seven high-rise towers including 4,100 hotel rooms, 2,600 condominium units, a 175,900 square-foot casino, 134,500 square feet of restaurant space, 347,887 square feet of retail, 539,607 square feet of convention space, a 50,000 square-foot health club, a 1,500-seat theater and 227,038 square feet of rooftop space for pools and other amenities.

Neither Naftali's statement nor today's commission action directly addresses the question of financing, which remains an issue for the Plaza and other developers needing to raise billions of dollars to complete their projects amid the worst financial markets in more than a decade.

Banks aren’t lending to new projects because they are burdened with loans that are losing value and can’t be resold.

“In our opinion, it will be very difficult for new gaming development projects throughout the country to obtain financing in the near term unless project sponsors are willing to significantly increase their equity contributions,” bond analyst Dennis Farrell of Wachovia Capital Markets said in a research note today.

This means that the Plaza Las Vegas folks could be hoping for the market to rebound before signing any financial agreements. Or they will have to put in more of their own money, which isn’t what they did in New York City. (The redevelopment of the original Fifth Avenue hotel was highly leveraged.)

In other words, the days of putting up 10 percent equity instead of, say, 50 percent – as Steve Wynn did to build Wynn Las Vegas a few years ago – are over, as are the days of using land as equity to finance a major project.

Land, after all, is only worth what a developer is able to build on it. And Wall Street banks, like mortgage lenders struggling to swallow their losses, want to see cash.