November 7, 2018 - 4:42 pm
Red Rock Resorts has raised the price tag of its redevelopment of the Palms for a second time this year.
However, the company reiterated the off-Strip project will be completed by the third quarter of 2019.
Red Rock is seeking to revive the 17-year-old property’s glory days by redesigning the gaming floor, adding new restaurants and clubs and upgrading rooms and suites.
The locals resort operator in February announced it would accelerate the Palms’ reconstruction, resulting in an increase from $485 million to $620 million. Red Rock said Wednesday the cost had risen yet another 10 percent.
“The overall budget for the redevelopment project has been increased to approximately $690 million, primarily due to increased construction costs driven by high demand in the Las Vegas market as well as higher material costs,” the company said in its third-quarter results.
The company said Palace Station reconstruction will finish on budget and by the end of the year as planned. Higher marketing costs to promote the new amenities at Palace Station as well as ongoing construction costs pinched the company’s quarterly profit.
Red Rock said third-quarter earnings per share rose 25 percent to 20 cents, missing analyst estimates of 24 cents and sending shares down after hours.
Quarterly profit attribute to shareholders was $14.7 million, compared with $11.8 million during the same three-month period last year. Profit growth was driven by a non-recurring change in the fair value of derivative instruments by $4.2 million.
Red Rock’s net revenues inched up 1.6 percent as growth in Las Vegas was offset by a decrease in management fees. Las Vegas net revenues rose 3.9 percent amid a strong local economy.
Adjusted cash flow fell 7.9 percent to $118 million after its contract to manage Gun Lake Casino expired in February.
Red Rock shares fell $1.08, or 4.5 percent, to $23.00 in after hours trading.