Analyst: Investor interest in Strip’s Alon project may be ‘diminishing’

An Australian gaming analyst said one of the developers of the proposed Alon project on the Strip is having trouble raising the financing that is needed to help build the planned hotel-casino complex.

In a research report Thursday, Credit Suisse gaming analyst Larry Gandler said Crown Resorts, the Australian casino developer that owns 74 percent of Alon, was looking to finance the resort by reducing its stake in project.

“That seems to be taking longer than we thought,” Gandler said. He said the slowdown in China’s economy, where the equity sale was taking place, may be diminishing investor interest in Alon.

Gandler said the slowness in the equity sale could hurt the debt-to-cash flow ratios for Crown, which also operates casinos in Macau through a joint venture partnership.

Few details have emerged about Alon since a group that includes Australian billionaire James Packer, former Wynn Resorts executive Andrew Pascal and investment firm Oaktree Capital acquired the 35-acre Strip site in July 2014. Gandler, in his report, said the Alon project had a estimated budget of $1.9 billion.

In July, Alon Leisure Management LLC, filed paperwork with Clark County seeking the various land entitlements and permits for the site, which once housed the New Frontier. A few early renderings were released along with plans calling for an 1,100-room hotel over two towers.

Pascal said in statement the property is progressing as planned.

“We are currently in the cycle of raising our capital, and the project has been well received,” Pascal said. “And while the macro-economic environment, particularly in Asia, is a bit turbulent, we remain confident in our capacity to complete our financing and execute our project.”

Site work has reportedly begun on the vacant lot.

According to Credit Suisse, would dilute its ownership in Alon to 45 percent by raising $425 million of equity in a sell-down to new investors. Credit Suisse said the Crown had told analysts the project would cost between $1.6 billion and $1.9 billion. Gandler said there may be “additional working capital” needed.

“We assume the higher end of the cost estimate,” Gandler said. “We believe the project could be financed 50-50 equity (and) debt.”

Packer’s private investment firm owns 53 percent of Crown. In August, he stepped down as Crown’s chairman to oversee the company’s global expansion, which included the October opening of the $3.2 billion Studio City complex in Macau, and Alon.

Packer — who has a net worth of $4.5 billion — is listed at No. 291 on the Forbes List of World Billionaires and is the second-richest person in Australia. He’s made headlines on the society pages and tabloids recently through his romantic relationship with entertainer Mariah Carey, who appeared with him at the Studio City opening.

The Alon site was subject of the Strip’s most expensive real estate transaction. Two Israeli companies bought the New Frontier and the land across from Wynn Las Vegas for $1.2 billion — roughly $24.8 million an acre — in 2007. The aging hotel-casino was demolished.

The companies planned to build a $5 billion hotel-casino based on the Plaza Hotel in New York City, but the recession killed the project.

Reportedly, the Alon group paid $260 million to acquire the parcel.

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

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