Las Vegas Business Press :: News Update : Mega-deals not in offing, sources say

Mega-deals not in offing, sources say

Rumors about New Frontier and 'W' site fail to pan out

BY TONY ILLIA & DAVID McKEE

Rumors of big-ticket sales of two prominent Las Vegas properties crumbled into dust Tuesday. On March 27, local gossip columnist Michael Politz reported, on TheVegasEye.com, that Edge Group “was close to pulling the trigger” on a $750 million sale of 50 acres along Harmon Avenue. A Business Press source subsequently identified the rumored buyer as the ownership consortium of the Hard Rock Hotel & Casino, which includes Morgans Hotel Group.

If true, the price would represent an astronomical markup for Harmon Avenue acreage. When Edge Group absorbed the land formerly earmarked for the defunct Las Ramblas project, next door to the Hard Rock, it did so for $8 million an acre. The Hard Rock itself recently repriced some surplus real estate down to $8 million per acre as well.

However, Maggie Feldman of Edge Star Residential denied the alleged sale, calling it totally unfounded. Luxury Realty Group owner Bruce Hiatt, however, confirmed Morgans’ interest in the land. “We are hearing that the buyers were part of a group trying consolidate the Hard Rock with the parcel,” he reported.

“But CityCenter has eclipsed all other projects in this category. The demand for CityCenter is very strong. We’ve had to turn away buyers because they have more buyers than inventory,” Hiatt continued. “It has definitely had an impact on the (apparently defunct) W project. Our buyers, now given the price per square foot, only want a Strip address. And it’s having significant impact. We’ve had buyers pull their deposits at W and move them over to CityCenter.”

"With softer marketing conditions it’s challenging for large scale projects to succeed without the necessary amenities or locations,” added Applied Analysis principal Brian Gordon. “CityCenter has been able to buck that trend. But there are not many players who have the ability to build several thousand units and absorb them in a reasonable time frame.” Whether or not W falls into that category, the failure rate for proposed condo projects in the Las Vegas Valley has exceeded 80 percent.

From a market-wide standpoint, potential supply has remained high while demand has softened,” Gordon elaborated. “It will require significant density for the developer to build at financially feasible price points. With that density, it’s a longer absorption period. It will take time and patience on the part of the developer.” In the case of Edge Group, its time and patience appear to have run out.

Another rumor that surfaced over the weekend had Wynn Resorts CEO Steve Wynn making a play for the New Frontier Hotel & Casino to the tune of $1.78 billion.“It’s in the rumor mill,” said VegasTodayandTomorrow.com curator Mark Adams reported on April 2, “that Steve Wynn has offered (New Frontier owner) Phil Ruffin $1.78 billion and that Ruffin has verbally agreed,” information that Adams credited to “an inside source. “Steve Wynn wants to expand his relationship with Donald Trump,” who is erecting condos behind Ruffin’s casino, “and this could be the beginnings of that.”

Or maybe not. By Tuesday, the rumor was being blamed on an April Fools’ Day item that ran on the Las Vegas architecture blog Two Way Hard Three and Adams was backing off the story, which he had repeatedly emphasized was “rumor.”

“I hadn't heard that. But there’s no doubt that the New Frontier and Riviera are red-hot with take-over rumors,” said Hiatt. “If the sale (valued at $51.6 million per acre) is true, it would really help to redevelop the North Strip and send property values skyrocketing.”

Applied Analysis’ Gordon points out that other North Strip buyers are laying down chump change by comparison to Wynn’s (apparently discredited) price. “The Sahara guys are paying $20 million an acre,” he said. “The (Wynn) price, if true, would be unheard in this market. There may be relatively few players who could pay that price. And Wynn could, given the basis value on his land and existing portfolio.

“Wynn might place a massive building right next to Trump,” Gordon speculated. “I don’t know that two have to necessarily be aligned. If Wynn were to acquire the land it would provide a larger footprint and additional opportunities to expand the Wynn franchise.”

If Wynn and Trump were to join forces, both would be sporting full heads of hair, as well. On Sunday, Trump “won” a proxy wrestling match in which his locks would have been forfeit had he been deemed the loser. The Detroit event drew a crowd of 80,000 and was available on pay-per-view TV for $50 a pop.

tonyillia@aol.com | 303-5699

dmckee@lvbusinesspress.com | 871-6780 x318

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