Updated 

Strip parcel has new owner, but future hazy


The empty Strip land parcel that once housed the New Frontier has a new lease on life, but its future is still unclear.

Australian billionaire James Packer said he acquired controlling interest in the nearly 35-acre site and will form a yet-to-be-named company to build a hotel-casino on the land in partnership with former Wynn Las Vegas President Andrew Pascal and investment firm Oaktree Capital Management.

In a statement released Sunday night by Packer’s Crown Resorts Ltd. in Melbourne, Australia, Packer said he will co-chairman the new company with Pascal. Plans are still being finalized but the company hopes to begin construction of a hotel-casino in 2015 to open in 2018.

Packer — who has a net worth of $6.5 billion — is listed at No. 212 on the Forbes List of World Billionaires and is the second-richest person in Australia.

Crown operates casinos in Australia, Macau and London. The company is also planning new casinos in Sydney and Brisbane, as well as in Sri Lanka. Crown has publicly indicated interest in Japan’s potential casino expansion.

“We have built Crown Resorts into a thriving international company,” Packer said. “We’ve always kept our eye on Las Vegas.”

The long dormant site — directly across from Wynn Las Vegas and Encore — once housed the New Frontier and was the subject of the Strip’s most expensive real estate transaction.

Two Israeli companies bought the New Frontier and the land for $1.24 billion — roughly $33 million an acre — in 2007. The aging hotel-casino was demolished but a plan for a $5 billion hotel-casino based on the Plaza Hotel in New York City was killed by the recession.

AFP News Service reported Packer paid $260 million for his interest in the parcel.

Oaktree President Bruce Karsh said the company decided to reinvest a portion of the proceeds from its debt investment and become an equity partner after talking with Packer and Pascal.

“We acquired our interest in the storied Frontier site because we believed it was the best piece of undeveloped land on the Las Vegas Strip,” Karsh said.

In a research note to investors, Union Gaming Group analyst Robert Shore said the transaction helps increase the value of Strip real estate, although it is still unclear exactly what will be developed on the site.

“We maintain that discussions, proposals, and even speculation around large-scale projects speak to ongoing and increasing interest in Las Vegas assets,” Shore said. “This lends credence to the Strip recovery story, fueling positive news flow centered on the north Strip in recent months, as savvy investors and developers continue to deploy their capital into this market.”

Packer has flirted with Las Vegas in past.

In 2009, Crown terminated a deal to buy Cannery Casino Resorts for $1.8 billion and was forced to pay a breakup fee and other penalties totaling $320 million.

In 2007, the company ended plans for Crown Las Vegas, which was to be built on the Strip between the Sahara and Riviera. The Federal Aviation Administration rejected plans for a 1,888-foot hotel tower, which would have been the tallest building in the Western Hemisphere.

In April, his name surfaced as a potential buyer of the Cosmopolitan of Las Vegas. The property was sold a month later to a subsidiary of the Blackstone Group, a multinational private equity investment firm, for $1.73 billion in an all-cash transaction.

“While we fell short in past attempts to enter that market, we now have the ideal opportunity with a great local partner in Andrew, a leading financial investor in Oaktree, and the perfect piece of property,” Packer said. “You can’t be in the gaming industry and not have a special reverence for Las Vegas.”

Pascal, 48, was president of Wynn Las Vegas from 2005 to 2010. In 2011, he started PlayStudios Inc., a Burlingame, Calif.-based social media company that created MyVegas, the social casino website for MGM Resorts International.

Pascal was the CEO of slot machine developer Silicon Gaming from 1998 to 2001.

“I’ve always been inspired by this city’s capacity for reinvention,” Pascal said. “I’m excited to have my hand in crafting something new and fresh for the resurgent Las Vegas market.”

Eilers Research gaming analyst Adam Krejcik, who follows social gaming developments, said PlayStudios is considered the eighth largest game publisher. He said Pascal did “a great job” creating the business with minimal fund-raising.

“Andrew is highly respected in the industry, both online and land-based casino, and sure I’m sure he is going to be successful in this next endeavor,” Krejcik said.

Shore said the renewed interest in the New Frontier site “underscores” the north Strip redevelopment story.

The $415 million SLS Las Vegas — a renovation of the former Sahara — opens Aug. 23. MGM Resorts International announced plans to develop a 33-acre permanent open-air concert venue across from SLS Las Vegas.

Meanwhile, Malaysia-based Genting Berhad is expected to begin construction this year on the $4 billion Resorts World Las Vegas on the former Echelon site, which is located next to the New Frontier parcel.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.

 

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