Real estate:

Developer plans to rehabilitate ‘eyesore’ development, just one of many investors doing so in the valley

An office building onsite at the mothballed medical-office project Centennial Hills Center shows signs of vandalism March 20, 2014. The center has new ownership and is slated for completion after being abandoned by collapsed lender Lehman Brothers.

Centennial Hills Center

The entrance to a two-story office building on site at the mothballed medical-office project Centennial Hills Center shows signs of vandalism March 20, 2014. The center has new ownership and is slated for completion after being abandoned by collapsed lender Lehman Brothers. Launch slideshow »

For vandals on the prowl, Centennial Hills Center was just too tempting.

They smashed windows, sprayed graffiti and ripped out the copper from the abandoned medical-office project. As if to rub it in, they even set the elevator on fire.

Some investors now bet that the Las Vegas property, despite its trashed and troubled past, will prove a big money-maker.

Florida developer Malcolm Sina and his partners acquired the partially built, 24-acre project on Durango Drive near Centennial Parkway last fall. They are cleaning it, finishing construction and working to fill it with doctors, nurses and other health care workers.

Construction crews are on site, and Sina aims to have the eight-building first phase open for business by year’s end. If and when he sells or leases out that section, he’ll break ground on the 10-building second phase.

Las Vegas Mayor Carolyn Goodman, City Councilman Steve Ross and others will gather there Wednesday to celebrate the project’s turnaround.

“It’s been sitting there as an eyesore,” Sina said.

Sina is one of several developers in the past year or so who bought local, mothballed real estate developments — victims of the recession — in order to finish them. Buyers often scoop them up at steep discounts, but these bargains are far from risk-free in economically wobbly Las Vegas.

The local office market, for instance, is one of the worst in the country, with sky-high vacancy rates and minuscule asking rents. Health care buildings are faring a bit better than general office properties but still are limping along.

“It’s not as though medical’s thriving out there,” CBRE Group broker Carla Cole said.

The valley’s medical-office market had a 19.6 percent vacancy rate in the fourth quarter last year, up from 17.7 percent a year earlier, according to Colliers International. Property owners sought an average $2.09 per square foot in the fourth quarter, down slightly from $2.11 a year before.

But in the northwest valley, where Centennial Hills is located, things aren’t as bleak.

Medical-office buildings there had an 11.3 percent fourth-quarter vacancy rate, second lowest among the valley’s submarkets, Colliers reported. Also, northwest landlords sought $2.36 per square foot, the highest rate in town.

Three hospitals — Centennial Hills, MountainView and Summerlin — are in or near the area. And while medical real-estate development is largely at a standstill around the valley, doctors and other health care groups want to buy office space in the northwest, Colliers broker Stacy Scheer said.

“They really don’t have much competition up there,” she said of Sina’s group.

Developers abandoned projects during the recession often because their lenders yanked the funds or went out of business. Centennial Hills Center was no different.

Investment bank Lehman Brothers issued the developer, Venture Corp., a $78 million construction loan in October 2007, property records show. In September 2008, though, Lehman collapsed under $600 billion in debt, helping spark the global economic crisis.

Centennial Hills Center was designed to have 14 office and four retail buildings. Venture, based near San Francisco, had almost finished construction on eight of the office buildings when Lehman went bankrupt. Work crews packed up and left, and the project became buried in liens and lawsuits, according to Sina.

Sina, who said he has 35 years of commercial real estate experience, much of that with medical properties, learned about Centennial Hills in spring 2009. After years of negotiations, he bought Lehman’s loan in September and then foreclosed on the property in October.

Sina declined to say how much he paid for Centennial Hills, nor would he say how much Venture spent before it halted construction. Clark County property records do not clearly show how much Sina paid to take control of the property.

Venture President Robert Eves did not return a call seeking comment.

The portion that Venture mothballed consists of seven one-story buildings, ranging from about 5,000 to 10,000 square feet each, and a two-story, 60,000-square-foot building. Sina said they are structurally sound, though he has to repaint them, finish the interior drywall and complete some site work, such as building turn-lanes into the property.

He also needs to clean the vandals’ mess.

Work crews are replacing the majority of the windows and, in the two-story building, the elevator cab and hydraulics, which were damaged beyond repair by the fire.

When Venture left, Centennial Hills became ripe for destruction.

“People just drive by, they don’t see anyone around it — it’s just too tempting for people to vandalize,” Sina said.

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