Sources say bank will return portion of deposits to group of homebuyers

Deutsche Bank AG, the German financial giant, has reached a tentative lawsuit settlement with a group of Cosmopolitan homebuyers, sources familiar with the deal say.

Clark County District Court Judge Elizabeth Gonzalez is expected to rule on the proposed pact on Oct. 20. The agreement only applies to plaintiffs for Cosmopolitan's 600-foot-tall, 1,322-unit West Tower. The $3.9 billion development at 3700 Las Vegas Blvd. is tentatively scheduled to open in late 2010. Perini Building Co. is the general contractor.

Homebuyers had claimed numerous breaches of contract, suing the owner earlier this year for return of deposits. More than $200 million in cash hung in the balance. Lawsuits were eventually consolidated into a single case. Deutsche Bank has since agreed to return 75 percent of principal West Tower deposits with a combined value of $140 million, sources say. Deutsche Bank did not return calls seeking comment for this story. "We are very optimistic. We have had some very fruitful discussions," said Terry Coffing, managing principal with the Las Vegas law firm Marquis & Aurbach, which represents 430 plaintiffs. "We have reached a tentative settlement. Our hope is that it will be finalized shortly."

Homebuyer purchase agreements never specified a completion date, giving plaintiffs a legal advantage that helped broker a settlement. The 7 million-square-foot complex will open a year late due to cash problems. Developer Bruce Eichner defaulted on construction loans last January and lost the project. Deutsche Bank bought the twin tower, 2,998-unit complex during a foreclosure sale last summer for $1 billion. It then hired The Related Cos. to oversee construction on its behalf. Three years ago, the company opened a Las Vegas office that it later closed after failing to build two high-rise developments of its own -- Icon and Las Ramblas.

Cosmopolitan's delayed opening has cost homebuyers money, the lawsuit claims; the project's condo-hotel concept allows homebuyers to generate revenue by renting their residences as hotel rooms when not in use. It also accuses the developer of onerous "one-sided terms" and violating "good faith and fair dealing" with homebuyers.

Cosmopolitan's East Tower, meanwhile, remains mired in litigation. Contracts for the 600-foot tall, 800-unit high-rise are structured differently than those of its neighbor, which makes a settlement less likely, sources say. Cosmopolitan's average homebuyer deposit is about $140,000; a sell-out of the entire East Tower could generate up to $112 million or more in down payments. Litigation seeking deposit reimbursements is expected to follow, sources say.

Many homebuyers are having a hard time getting mortgages in a skittish lending environment. A deepening recession and rising unemployment is fueling more financial conservatism. Many investors and homebuyers are delaying and deferring large capital expenditures during uncertain economic times.

"We have so many condo hotel units in the market that is driving price points downward," said Bruce Hiatt, owner of Luxury Realty Group Inc., a Las Vegas-based high-rise condominium brokerage company. "Today's buyer is much more aware of the current resale marketplace and those price points, which are very different from what they were a few years ago."


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