- Shopoff Realty Investments has paused construction on its approximately $550 million Las Vegas Dream Resort due to construction financing issues, said Bill Shopoff, its president and CEO, in an email to Construction Dive.
- “We have temporarily paused work on the Dream Las Vegas site while we work to finalize and close the construction financing,” said Shopoff. “This is anticipated to occur in the near future, as we are in active discussions with our lenders to finalize terms.”
- Shopoff said as soon as the financing is in place, the project’s construction will be restarted. McCarthy Building Cos., the lead contractor on the project, filed a lien notice March 10, saying that almost $40.2 million for performed work has not yet been paid, according to the Las Vegas Review Journal.
The delay follows warnings from construction industry experts on growing concerns around financing, especially following the closures of Silicon Valley Bank and Signature Bank a few weeks ago.
Contractors can expect tightening and some tension from small and regional banks, said Greg Ross, industry managing partner at Grant Thornton, a Chicago-based accounting firm. Those bank failures and subsequent turbulence throughout the banking system may trigger recession during the second half of 2023, according to Fannie Mae.
Shopoff said the company has “every intention to complete this project as planned.” The hotel and casino venue was originally scheduled to open in 2024.
When complete, the 531-room lifestyle hotel will feature eight food and beverage venues, as well as about 26,000 square feet of casino space. The project also includes nightlife venues, a pool deck, a bar, a lounge space on the gaming floor and onsite parking.
Additional work on the Las Vegas Dream Resort project, such as permitting and other non-construction activities, will continue to proceed. All parties and prior agreements remain in place, added Shopoff.
Nevertheless, financing woes are increasingly weighing on construction projects.
For example, David Zwang, executive managing director at Toronto-based Colliers, a real estate services company, said during the 2023 New York Build Conference that financing remains a challenge and “probably will be harder to get.” Anirban Basu, chief economist at Associated Builders and Contractors, said contractors’ optimistic outlook may dim later this year due to rising financing costs.
Tougher lending standards among small banks may slow overall economic growth by half a percentage point, according to Goldman Sachs.