Credit Crunch Crimps Commercial Development


August 10, 2008

J.W. Elphinstone – Associated Press

With a vision of transforming downtown Seattle, the Clise family spent more than a century buying up key pieces of land. But the credit chaos has forced Al Clise to postpone his plans for a grand, 13-acre commercial and residential development.

Clise Properties Inc. halted discussions with potential partners in April after it became clear that most investors wouldn’t find reasonable financing to develop the site with the company during a global credit crunch. Interested investors had to put up more than $600 million just to compete for the opportunity.

“The world changed in a very negative way. Everybody pulled back,” said Clise, the chairman and chief executive. “Deals like this are just not getting financed.”

Large and small commercial developments nationwide have been delayed or scrapped as lenders tighten credit standards on construction loans. Whether some of these projects will break ground or reach completion remains uncertain.

In June, Australian gambling firm Crown Ltd. backed out of a $5 billion project to build Las Vegas’ tallest tower because of financing issues. The company held a 38 percent stake in the joint venture with Texas developer Christopher Milam and private-equity firm York Capital Management and will have to write off about $42 million related to the investment.

Also in Sin City, the ownership and future of the Cosmopolitan Resort and Casino are up in the air. In March, Deutsche Bank started the foreclosure process after developer Ian Bruce Eichner and his company defaulted on a $760 million construction loan.

Construction still continues on the $3 billion high rise casino and hotel. General contractor Perini Corp. declined to comment on the project, while Deutsche Bank did not return calls seeking comment.



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