The Montage, the highest profile project in the renaissance of downtown Reno, has been handed back to its lender by the developer.
L3 Development will continue to manage the conversion of the former Golden Phoenix casino hotel into 22 floors of luxury condominiums with first-floor retail and restaurant space.
Fernando Leal, a principal in L3 Development, said a loan on the project with its primary lender, Chicago's Corus Bank, was due for renewal on Dec. 15. The company decided to turn The Montage back to the bank through a deed in lieu of a foreclosure.
That's an unusual process that can be used only when a project is free of other liens or loans.
"This was a business decision driven by uncertain economic conditions that impacted our ability to forecast critical factors such as availability of credit for prospective buyers, consumer confidence and housing prices," Leal said.
Unable to make those basic forecasts, he said L3 couldn't predict that enough units would be sold to justify new financing.
Corus Bank said this fall that it had put a $126 million condominium loan in Reno on a non-accrual basis, meaning interest payments were overdue. The bank didn't directly identify The Montage as the property.
Leal's company will continue to manage The Montage project.
"This will make the transition seamless to our buyers," he said. "Managing other companies' projects is not our business, but in this case given our commitment to the redevelopment of downtown, our other projects, and most importantly, our existing buyers we thought it was the right business decision."
Leal noted that the management agreement also testifies to a continued good relationship between L3 and Corus Bank.
The Montage is expected to have certificates of occupancy on the entire building this week and looks to close sales of units to individual buyers as quickly as possible.
In October, Leal said about 40 percent of the 380 condominiums at the The Montage had been sold.
L3 also owns the now-closed Fitzgeralds Casino/Hotel next to The Montage and plans to redevelop it into a boutique hotel with a small gaming presence and some retail.
Leal said the company's commitment to downtown redevelopment projects "is as strong as ever."
"We are very proud of The Montage and hope it will serve as a catalyst for continued development and as the bellwether that all future projects will be judged by," he said.
