Wall Street saw Monday’s announced sale of the Treasure Island as an early holiday present.
Former New Frontier owner Phil Ruffin agreed to purchase the 2,885-room Strip resort from MGM Mirage for $775 million. The deal is expected to close by June.
In a year that has seemingly been full of nothing but bad news, the sale of a single Las Vegas hotel-casino was hailed as a sign that the economic meltdown that has devastated the gaming business may finally be nearing a bottom.
“We view this as positive news for the gaming sector in general,” Stifel Nicolaus gaming analyst Steven Wieczynski told investors after the deal was announced. “It shows that investors still have faith in the long-term prospects of gaming and that properties can still command attractive multiples. We believe that other operators will react positively to this news.”
Macquarie Capital gaming analyst Joel Simkins said Ruffin had about $1.24 billion burning a hole in his pockets, proceeds from his sale of the New Frontier in 2007. Ruffin paid all of $167 million for the aging casino in 1998.
“Mr. Ruffin was one of the few individual investors in the gaming industry with significant cash sitting on the sidelines,” Simkins said.
Executives from one East Coast casino operator have also been kicking the tires along the Strip. Penn National Gaming, which has $1.48 billion in proceeds from an aborted buy out attempt, may become a purchaser as other Strip locations come on to the market.