Updated May 5, 2023 - 7:07 pm
Red Rock Resorts Inc. — recently in the spotlight for its surprising deal of a binding agreement to sell nearly 49 acres to the Oakland Athletics — on Thursday dodged specific questions about the transaction, during its first-quarter earnings call.
Executives said the agreement with the A’s is confidential, but it expects the deal to close in the fourth quarter. The total amount of the transaction wasn’t revealed.
Analysts prodded executives for information on whether there would be gaming entitlements on either the land purchased by the A’s or adjacent property that would be retained by Red Rock Resorts.
“Unfortunately, we’re under confidentiality so we can’t really answer any of those questions at this time,” Executive Vice President and Chief Financial Officer Stephen Cootey said.
Earlier in the call, Cootey said the A’s announced on April 20 that they had entered into a purchase agreement to buy 48.6 acres on what Red Rock executives refer to as their “Viva” site — the former location of the Wild Wild West casino at Tropicana Avenue and Dean Martin Drive. The A’s also were granted an option to acquire an additional 8 acres at the site.
“As a reminder, the entire Viva site consists of 96 acres so (if) the A’s transaction closes and they exercise their 8-acre option, we still retain 39.3 acres for future modernization as we continue to execute on our strategy of repositioning our land portfolio for future growth,” Cootey said.
The purchase of the land by the A’s for a planned $1.5 billion, 30,000-seat indoor stadium would be an important step toward relocating the Major League Baseball franchise to Las Vegas in the next few years.
The A’s portion of land in the agreement is bordered by Dean Martin Drive to the east, Tompkins Avenue to the north, Procyon Street to the west and Tropicana Avenue to the south. The additional 8 acres is just west of the 48.6 acres, bordered by Valley View Boulevard, Tropicana and Procyon.
Asked by an analyst how the A’s presence would monetize the site, Red Rock Chairman and CEO Frank Fertitta III said the transaction is part of a larger corporate strategy to capitalize on land holdings valleywide.
“What we’ve really talked about the last few quarters is getting a better lay for our future growth pipeline and you’ve seen that we’ve acquired a few sites out where all the growth is off the beltway in the Las Vegas Valley,” Fertitta said.
“We think we’re well positioned, and I think we’re looking really to monetize the Viva parcel and we think that the A’s would (be a) really good thing to actually increase the value of the remaining property. So we’re pretty bullish that we’re going to be able to monetize the Viva site, basically, and we wind up with all these new sites out in the suburbs that we’ve acquired over the last 12 months.”
Football, hockey help casinos
Red Rock President Scott Kreeger said the presence of the Vegas Golden Knights and the Las Vegas Raiders in the city have generally helped casino business.
“We see throughout the valley that people come out for the Knights’ games,” Kreeger said in response to an analyst’s question. “You can see that in our casinos, you see that in the small pubs and taverns, and we also have a strategic relationship with the Golden Knights that we benefit from within our marketing division.
“We are big fans of organized sports in Las Vegas, we’re big fans of both the football team, the hockey team and, eventually, the baseball team as well,” he said.
“It’s great for tourism, creating demand for the hotel rooms in the city,” Fertitta added.
The company also announced Thursday that the cost of its new Durango property in the southwest Las Vegas Valley has increased.
Cootey said construction costs increased from $750 million to $780 million as a result of expanding the building’s casino footprint — adding 360 gaming positions — and increasing construction labor and procurement costs.
“We believe that a larger casino footprint will better align the product offering with the anticipated growth and favorable demographics in the area surrounding Durango,” he said.
Cootey said the low-rise structure is fully enclosed and the hotel tower is nearing enclosure. He said the central plant would be online within weeks.
The casino-resort is on schedule to open in the fourth quarter.
Red Rock’s results surpassed analysts’ expectations.
Cootey said the company benefited from riding the positive regional economic wave of the quarter with higher-than-average occupancy and average daily room rates, but executives are still carefully watching and reacting to rising inflation and interest rates.
The company’s board of directors declared a 25-cent-per-share quarterly dividend to be paid June 30 to shareholders of record June 15.
For the quarter that ended March 31, Red Rock reported net income of $88.5 million, 75 cents a share, on revenue of $433.6 million. That compares with first-quarter 2022 net income of $92.2 million, 77 cents a share, on revenue of $401.6 million. The company had record revenue and adjusted cash flow for the quarter.
Red Rock shares, traded on the Nasdaq exchange, closed down $1.10, 2.3 percent, on average volume to $46.44 per share. But after its earnings were released, the stock rebounded in after-hours trading by $2.51, 5.4 percent, to end at $48.95, within $1 of the stock’s 52-week high.
Red Rock Resorts Inc.
First-quarter revenue and earnings for Las Vegas-based Red Rock Resorts Inc., operators of the Red Rock Resort, Green Valley Ranch and Palace Station among other Las Vegas locals properties. (Nasdaq: RRR)
1Q 2023: $433.6 million
1Q 2022: $401.6 million
1Q 2023: $88.5 million
1Q 2022: $92.2 million
Earnings per share
1Q 2023: $0.75
1Q 2022: $0.77