Full House adds Hyatt Lake Tahoe to its family

Full House Resorts Inc. has completed its $700,000 acquisition of the Grand Lodge Casino at the Hyatt Regency Lake Tahoe from HCC Corp., an affiliate of HGMI Gaming Inc.

Full House officials said the deal includes a five-year
re-lease agreement for the Grand Lodge Casino at the Hyatt in Incline Village. The Las Vegas-based company will pay HGMI a fixed monthly rent of $125,000 over the initial term of the lease.

Andre Hilliou, chairman and CEO of Full House, said the purchase was a natural fit for his company, because it owns Stockman’s Casino in Fallon.

“The property really exceeded our expectations,” he said. “We feel very comfortable with the management team. We also like the customer base … it’s one of the leading casinos in the area.”

The Hyatt Regency Lake Tahoe Grand Lodge Casino features approximately 260 slot machines, 25 table games and a sports book.

Under terms of the deal, Full House will operate the casino and retain all profits, in addition to paying monthly rent. There is a mutual option to renew for another five years.

“If Hyatt wanted to reclaim the casino at expiration, it would have to repurchase equipment from Full House or buy new equipment. We doubt this will happen,” said Justin Sebastiano, a gaming analyst with Morgan Joseph TriArtisan in New York.

Full House officials said the property reported earnings of $3.2 million in fiscal year 2010. Sebastiano expects that number to increase to $3.5 million or $3.7 million through improved operating efficiencies.

In a research note Friday, he attributed the deal to HGMI wanting to “monetize some of its gaming assets.” Sebastiano expected the lease to be renewed “in perpetuity.”

Besides its properties in Northern Nevada, Full House has management agreement with the FireKeepers Casino in Battle Creek, Mich., and owns the Rising Star casino in Rising Star, Ind.

The company also has agreed to a management contract to oversee the Buffalo Thunder Casino and Resort in Santa Fe, N.M., which was expected to be approved by the end of the month. The deal will pay Full House a monthly management fee of $100,000, plus a bonus based on achieving certain financial targets, according to the company.

Hilliou said Full House would like to purchase a property in Las Vegas, but until the local market recovers, the company was looking at opportunities in other parts of the country.

Full House reported earnings of
$1.4 million, or 8 cents a share, in the second quarter, compared with $1.5 million, or 8 cents a share, a year earlier.

Second-quarter revenue was $31.1 million.

Analysts surveyed by Yahoo Finance expect the company to earn 11 cents a share for the third quarter on estimated revenue of $31.5 million.

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.

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