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The owner of a new – but troubled – Southern Nevada office building has agreed to give the property back to the bank.
Beginning in 2008, Mammoth Henderson I LLC developed the 63,000-square-foot building at 2470 St. Rose Parkway in Henderson, just south of Interstate 215.
The building was designed to accommodate about 50 small office suites based on a business plan in which the suites would serve small businesses and be move-in ready with short-term leases.
But construction of St. Rose Parkway in 2009 blocked the main access to the development and the collapse of the subprime mortgage industry hurt leasing for the building.
The real estate and mortgage industries would have provided many of the project’s tenants.
That’s according to developer Mammoth Equities LLC, which put building owner Mammoth Henderson I LLC into bankruptcy last fall.
Mammoth Henderson I initially filed a bankruptcy reorganization plan with an appraised value of the building being $7.35 million.
But now Mammoth Henderson I is asking that the bankruptcy case be closed as a new appraisal found the building is worth as much as $5 million less than the $7.35 million figure, court records show.
With no chance of successfully reorganizing the business, Mammoth Henderson I has agreed to allow Bank of America to foreclose on the building, court records filed last week show.
Mammoth Henderson I also agreed to the immediate appointment of a receiver to supervise the project, court records show.
Attorneys for Bank of America, owed $10.9 million, said in a court filing that Mammoth Henderson I hasn’t made payments on the note since November 2009.
"Debtor agrees to consent to the appointment of a state court receiver over the property and agrees to cooperate with the receiver to ensure a smooth turnover with minimal disruption to tenants of the property," said a settlement agreement filed in bankruptcy court by Mammoth Henderson I and Bank of America.
The decline in the value of the property is likely related to weak commercial real estate fundamentals in the Las Vegas area tied to the recession – including an office vacancy rate pushing 25 percent.
And, according to brokerage Colliers International, the Henderson office market was hit with negative absorption of 264,614 square feet of office space in the first quarter.