Two Vegas projects got default notices: builder
NEW YORK, March 14 (Reuters) - Two Las Vegas housing projects involving some of the largest U.S. builders have received default notices on about $765 million in debt, according to a partner in the projects.
Thomas DeVore, chief operating officer of Focus Property Group, said two developments, called Inspirada and Kyle Cannon Gateway, have each missed an interest payment in recent weeks, have received default notices from their lending consortiums and are in negotiations with the lenders.
"Sales pace has not kept up with what had been modeled," DeVore said in an interview. "There's a need to restructure the debt on both."
DeVore said Focus's partners on one or both developments include Toll Brothers Inc (TOL.N), KB Home (KBH.N), Meritage Homes Corp (MTH.N), Beazer Homes USA Inc (BZH.N), Pulte Homes Inc (PHM.N), Lennar Corp (LEN.N) and Ryland Group Inc (RYL.N).
No officials from those companies were immediately available to comment.
Earlier this week, Toll Brothers said it could face "significant losses" if its joint-venture partners failed to meet their financial obligations to complete developments due to the continued downturn in the home-building industry. But the builder did not say which partners or which projects were in danger of defaulting.
News of the defaults was reported earlier by The Wall Street Journal, which had an interview with Las Vegas-based Focus's chief executive officer John Ritter.
DeVore said the joint-venture partners are in talks with their lending consortiums -- led by JP Morgan for Inspirada and Wachovia for Kyle Cannon Gateway -- to try to extend their loans' terms.
Inspirada was planned to have as many as 13,500 homes in 5 to 10 years, DeVore said, but only about 162 have been sold since last spring, when they first went on the market.
"We'd expect a project like this to absorb hundreds of homes a year," DeVore said. "It's going slower than we hoped."
DeVore said the problem in the Las Vegas market is that as home prices soared over the last two or three years, many homes came on the market.
"We need to work through our existing home inventory," DeVore said.
Focus owns 15.5 percent of Inspirada and 23 percent of Kyle Cannon Gateway. (Editing by Gary Hill)
