Real Estate Weekly: Highrollers meet steamrollers with $18m Kennedy deal

The ranch-style Pollyanna Motel sits on a small, i.76 acre parcel of the Las Vegas strip, but with a loan of $18.5 million from Kennedy Funding, a direct private lender based in Hackensack, New Jersey, it is about to begin a transformation into a towering residential development on the most famous boulevard in the world.

Comprised of condominiums as well as a condominium hotel, the project represents a formidable addition to the Strip, and is representative of Las Vegas' ongoing growth and expansion.

The Mandalay Bay Hotel and Casino and Bali Hal Golf Club are across the street, and the Tropicana, the MGM Grand, New York, New York and Monte Carlo are all proximate to the site. A 100-foot height restriction on new construction, imposed by nearby McCarran Airport, dissuaded banks and other traditional lenders from participating in the purchase and development of the motel, originally built in 1954. But the borrowers believed they could win a variance that would allow them to build higher, between 170-260 feet.

On a recent Wednesday, a call went out to Kennedy Funding. By Friday the purchasers had a signed commitment, and by Sunday, an approval for the $18.5 million loan.

"No traditional lender would come to the table within our time frame," explained Todd Roth, Esq., of Metropolitan Land Development LLC, purchasers of the property. "Kennedy Funding understood the enormous potential value of Las Vegas real estate, and provided the funds to complete

the purchase. Kennedy made this happen."

Kennedy Funding completed their evaluation and funding agreement while busy with a range of domestic and international deals.

Kennedy partner Henry Haskell and his son, David, who recently joined the finn, visited the Las Vegas site as part of a lengthy trip evaluating 2 other projects in the US and Mexico. Eight flights in three days across two countries is an indication of Kennedy's expanding global business, but the extensive activity did not prevent them from a quick closing on the Vegas land deal.

"The site is in the heart of the Strip, part of the most valuable and high-traffic real estate in the country," observed Mr. Haskell.

"Once the variance comes through, as we believe it will, Metropolitan Land Development will build condominiums and a condominium hotel that we project will have a sustained, escalating value. Other investors who considered participating insisted on equity before they would fund the purchase, but at Kennedy, we believe in the vision of the borrower. We fund based on value, we don't demand participation or attach any strings beyond basic collateral. This purchase will lead to a development with dramatic impact on the Las Vegas profile." Jeffrey Wolfer, president of Kennedy Funding, concurs. "This is a tremendously exciting project, for Las Vegas and for Kennedy Funding. And it certainly is an impressive 'entry point' for David Haskell. It's clear that he will be a talented, new source of energy and inspiration for the company, and we are pleased that he has joined us."

The residential tower will be designed, engineered, and built by Marnell Corrao Associates, and is projected to rise 24-26 stories, after the zoning variance and permits are in place. Marnell is the premier builder in Las Vegas, having completed structures for Harrah's, MGM / Mirage, Wynn Design and Development, and Mandalay Bay. Early construction costs are estimated to be in the range of $200 million. Other top-of-the-line design and engineering firms are expected on board soon.