Icahn sells Southern Nevada casinos

Bargain-hunting corporate raider Carl Icahn, who snapped up several Southern Nevada casinos at discount prices, is selling them and booking a handsome profit.

American Entertainment Properties Corp., a wholly owned subsidiary of Icahn’s American Real Estate Partners, announced Monday that it has agreed to sell the parent company of the Stratosphere, both Arizona Charlie’s casinos and a Laughlin casino for $1.3 billion to Whitehall Street Real Estate Funds, an affiliate of Goldman, Sachs & Co.

Icahn said in a statement that American Entertainment Properties expects to realize a gain of $1 billion from the sale of American Casino & Entertainment Properties.

"Our gaming investments are a successful example of our strategy of acquiring undervalued and out of favor assets, and improving operations and enhancing value," Icahn said in a statement.

A fifth property, the Sands in Atlantic City and some adjacent property, was sold in November for $274.8 million to Pinnacle Entertainment.

Icahn, 71, started investing in the Stratosphere in 1997 when he purchased $82 million of the property’s $203 million in mortgage debt.

Grand Casinos had bought out Vegas World founder Bob Stupak for $51 million in 1994. Icahn moved in three years later when payments on a $205 million mortgage bond used to finish the $550 million resort became past due.

The New York-based executive took control of Arizona Charlie’s Decatur in 1998 when Becker Enterprises lost the property in Bankruptcy Court after failing to make interest payments on bonds.

Icahn bought the property’s outstanding bonds for 75 cents on the dollar, according to Review-Journal reports.

Icahn followed with the purchase for $43.3 million of Arizona Charlie’s Boulder, then called Sunrise Suites, in 2000, also out of bankruptcy.

"Carl (Icahn) is an astute purchaser of assets, " American Casino & Entertainment Properties President and Chief Operating Officer Richard Brown said. "He tends to go in and purchase undervalued assets. When you take a look now at what the multiples are now in gaming, Carl (Icahn) felt now was the time to sell."

Forbes estimates Icahn’s personal worth at $13 billion.

The deal is expected to close late this year subject to approval from the state Gaming Commission and Gaming Control Board.

The buyout is Whitehall’s second foray into local gaming with the investment branch holding a 40 percent share in the Las Vegas Hilton through WH/LVH Managers Vetco.

"For Whitehall it makes a lot of sense for them to expand their presence in gaming," said John Knott, executive vice president of the Global Gaming Group for CB Richard Ellis. "They obviously see some upside for performance with this portfolio. They’re looking at getting a broader presence in the gaming market, and this was a portfolio of property that was available."

The cornerstone of the deal involving middle-market casinos seems to be the Stratosphere and accompanying 17 acres of undeveloped land, analysts said.

The 2,444-room property includes one of the area’s most recognizable landmarks, the 1,149-foot tower — the country’s tallest structure west of the Mississippi River — topped with a restaurant, observation deck and roller coaster.

Arizona Charlie’s Boulder and Arizona Charlie’s Decatur are off-Strip properties that compete with local gaming giant Station Casinos for customers.

The sale also involves the largest hotel in Laughlin, the Aquarius. The property, formerly the Flamingo, was acquired in May from Harrah’s Entertainment.

"It looks like the valuation of the gaming business is ahead of where other transactions may be lining up in the real estate sector," said Brian Gordon, a principal at Applied Analysis. "The valuation appears to be in excess of 11 times cash flow, which appears to be a premium compared to other transactions in the market."

The four gaming properties generated revenue of $385.7 million in 2006, but posted only a $123,000 revenue increase year-to-year for the Stratosphere and the two Arizona Charlie’s, according to regulatory filings.

The three properties saw casino revenue drop $3.3 million in 2006, and operating income fell by $8 million. Casino revenues accounted for 51.2 percent of the four properties’ gross revenues.

The sale follows two other recent purchases on the north end of the Strip.

The 17.45-acre Sahara was sold in early March to Los Angeles-based SBE Entertainment Group for between $300 million and $400 million by the family of the late casino pioneer William Bennett.

That was followed by the family’s sale of 26 acres across from the Sahara on Las Vegas Boulevard to MGM Mirage for $444 million last week. Both deals are expected to close this year.

Whitehall had shown some interest in the Sahara before it was sold, someone familiar with the negotiations said.

Three Whitehall executives were licensed last year to share a seat on the Las Vegas Hilton board, but the New York-based company will need another license to take over the Stratosphere and the other casinos.

Nevada Gaming Control Board member Mark Clayton said Monday that as a current license holder, it might quickly gain approval.

Bond analysts were mixed on the news.

Moody’s Investors Service changed the ratings outlook on $215 million in debt issued by American Casino Entertainment to developing from stable, reflecting "uncertainty" about the credit profile of the company after being taken over.

Wachovia analyst Dennis Farrell said the bonds would continue to outperform and expected Whitehall to develop the Stratosphere further.

"Due to the elevated purchase price we believe Whitehall has identified further opportunities to create equity value, which we expect will most likely occur at the Stratosphere where 17 acres are undeveloped," Farrell said in a research note.

Icahn controls 87 percent of the publicly traded Mount Kisco, N.Y.-based American Real Estate Partners, which owns subdivisions, condominiums, hotels and golf courses around the United States.

American Real Estate Partners closed at $107.95 on the New York Stock Exchange on Monday, an increase of 20 cents.

The Associated Press contributed to this report.

WHAT THE SALE INVOLVES

Arizona Charlie’s Boulder

• Hotel rooms: 302.

• Casino: 35,000-square feet.

• Fast fact: Corporate raider Carl Icahn paid $43.3 million buying the bankrupt property, then called Sunrise Suites, in January 2000 before investing nearly $12 million on improvements.

Arizona Charlie’s Decatur

• Hotel rooms: 258.

• Casino: 56,706-square feet.

• Fast fact: The original $18 million property was opened in 1987 by Becker Enterprises. The owners spent $40 million on an expansion in 1994. Encountered financial trouble when a Missouri riverboat enterprise failed, and Icahn took control buying bankrupt bonds 75 cents on the dollar.

Stratosphere

• Hotel rooms: 2,444.

• Casino: 100,000-square feet.

• Fast fact: Originally opened as 100-room Vegas World by Bob Stupak in 1979. Stupak gambling pal Lyle Berman paid $51 million cash through Grand Casinos midway through Stratosphere construction in 1994. A $205 million bond helped finished the new $550 million resort, which opened April 30, 1996, but Grand Casinos missed bond payments and lost control to Icahn by 1998.

Aquarius Casino Resort:

• Hotel rooms: 2,000.

• Casino: 60,000-square feet.

• Fast fact: Icahn paid $170 million in May to Harrah’s Entertainment for Laughlin’s largest hotel, formerly called the Flamingo.

ad-high_impact_4
News
Three Square helps TSA workers
Three Square Food Bank donated over 400 care bags to TSA workers affected by the government shutdown Wednesday, filled with food, personal hygiene products and water.
Las Vegas furniture store donates to Clark County firehouses
Walker Furniture donated new mattresses to all 30 Clark County firehouses in the Las Vegas Valley, starting today with Station 22. (Mat Luschek/Las Vegas Review-Journal)
Mount Charleston Gets Heavy Snow, Fog
Mount Charleston saw heavy snow today, and fog in lower elevations as a cold front swept across the Las Vegas Valley. (Benjamin Hager/Las Vegas Review-Journal)
Krystal Whipple arrested in Arizona
Krystal Whipple, charged in the killing of a Las Vegas nail salon manager over a $35 manicure, is expected to return to Nevada to face a murder charge.
Holocaust survivor on acceptance
Holocaust survivor Celina Karp Biniaz, who was the youngest person on Schindler’s List, talks about the most important message for people to understand from her life and experiences.
Holocaust survivor speaks about telling her story
Holocaust survivor Celina Karp Biniaz, who was the youngest person on Schindler’s List, tells of opening up about her experiences during Sunday’s event at Temple Sinai.
Jesus Jara State of the Schools address
Clark County School District Superintendent Jesus Jara delivers his State of the Schools address on Friday, Jan. 11, 2019. (Amelia Pak-Harvey/Las Vegas Review-Journal)
Michael Naft sworn in to Clark County Commission
Michael Naft, chosen by Gov. Steve Sisolak to be his replacement on the Clark County Commission, was sworn into office on Wednesday, Jan. 9, 2019. (Shea Johnson/Las Vegas Review-Journal)
CES Opening Party in Omnia Nightclub at Caesars Palace
CES conventioneers packed Omnia Nightclub at Caesars Palace, and let loose as they danced to DJs into the night. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas police piecing together details of fatal shooting
Six hours after the fact, Las Vegas homicide detectives worked to reconstruct the scene of a shooting early Jan. 7 that left one man dead in the southeast valley. (Rio Lacanlale/Las Vegas Review-Journal)
Dyer Lawrence explains college football playoff system proposal
Las Vegan Dyer Lawrence has a new idea for a college football playoff system that includes a unique scheduling component called National Call Out Day. (Ron Kantowski/Las Vegas Review-Journal)
Death row inmate Scott Dozier found dead in his cell
Nevada death row inmate Scott Dozier is dead. Dozier’s death ends his legal odyssey, which began in 2007 when he was convicted in the 2002 murder of Jeremiah Miller, but does little to clarify what’s next for Nevada’s death penalty.
I-15 southbound near Primm closed after ‘major crash’
A rollover crash Saturday morning involving at least nine vehicles on southbound Interstate 15 near Primm caused an hourslong traffic delay. Traffic was backed up to Sloan, live traffic cameras show. (Rio Lacanlale/Las Vegas Review-Journal)
Death Valley visitors deal with shutdown
Visitors staying at the Furnace Creek Campground were forced to move from the campground following health and safety concerns due to lack of resources during the partial government shutdown at Death Valley National Park in Calif., on Friday, Jan. 4, 2019. Richard Brian Las Vegas Review-Journal @vegasphotograph
Half of homicides in Henderson for 2018 domestic violence related
Lt. Kirk Moore of the public information office of the city of Henderson police department speaks to the Review-Journal in Henderson, Thursday, Jan. 3, 2019. Henderson saw a slight increase in homicides in the past year. (Rachel Aston/Las Vegas Review-Journal)
Governor-elect Steve Sisolak stops by Las Vegas Boys and Girls Club
Governor-elect Steve Sisolak kicks off his tour to Carson City, which will take him from Las Vegas, through Tonopah, and up to the capital city. First stop is the Downtown Boys & Girls Club.
Certificates for renewing wedding vows in Clark County
The Marriage License Bureau in Clark County began issuing a Certificate of Vow Renewal to married couples who are renewing their wedding vows on Jan. 3, 2019. (Shea Johnson/Las Vegas Review-Journal)
Las Vegas flu season better than last year (so far)
Dr. Fermin Leguen, chief medical officer and director of clinical services at the Southern Nevada Health District, said there were 24 flu-related deaths at this point in the flu season. No deaths have been reported so far this year. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
The Las Vegas Valley’s First Baby of 2019
The first 2019 baby in the Las Vegas Valley was Melialani Chihiro Manning, born at 12:10 a.m. at Henderson Hospital. (Briana Erickson/Las Vegas Review-Journal)
Las Vegas NYE Fireworks - VIDEO
The full show: A spectacular view from the rooftop of the Trump International Hotel as 80,000 pyrotechnics illuminated the Las Vegas Strip at the stroke of midnight. Fireworks by Grucci choreographed launches from the Stratosphere, the Venetian, Treasure Island, Caesars Palace, Planet Hollywood, Aria and MGM Grand.
Snow in Henderson on New Year's Eve morning
Light snow flurries in Anthem Highlands in Henderson on Monday morning, the last day of 2018.
Sources: Henderson Constable may face more charges
Henderson Constable Earl Mitchell may face additional charges ... stemming from his spending of county funds, sources said. Mitchell was indicted earlier this month on five felony theft and fraud charges ... after a Las Vegas Review-Journal story questioned his spending. But grand jury records show even more extensive spending including ... an $800 dinner at steakhouse ... nearly 200 atm withdrawals mostly at gambling establishments ... and even Disneyland tickets. But his attorney plans to ask a judge to dismiss the charges.
Las Vegas NYE Restrictions and Enhanced Security
If you are planning to celebrate New Year's Eve on the Las Vegas Strip or Fremont Street, be aware that you are not allowed to bring backpacks, coolers, strollers or glass. There will also be an increase in security to ensure safe celebrations across town.
Catholic Charities serves up 53rd annual Christmas dinner
Catholic Charities of Southern Nevada and more than 100 volunteers served 1,000 Christmas meals to Southern Nevada's homeless and less fortunate. (K.M. Cannon Las Vegas Review-Journal @kmcannonphoto)
Henderson couple adds another school to their generosity
Bob and Sandy Ellis of Henderson, who donate to several Clark County School District schools, have added Matt Kelly Elementary in Las Vegas to their list of schools where every student gets new shoes, socks and a toy. (K.M. Cannon/Las Vegas Review-Journal)
Jeffrey Martin Added To Nevada's Black Book
Martin was one of four men convicted of theft and cheating at gambling in 2016 in Clark County District Court and sentenced to prison. The Nevada Gaming Commission voted unanimously Thursday to include Martin in the black book.
Raiders Stadium Timelapse
Construction on the new Raiders stadium continues in Las Vegas.
Buffalo Wild Wings security video
Security footage from a Buffalo Wild Wings restaurant in southwest Las Vegas captured a driver who repeatedly crashed into a vehicle in a failed attempt to squeeze into a tight parking spot.
The Magical Forest at Opportunity Village
Opportunity Village's Magical Forest added 1 million lights and a synchronized music show visible from all over the forest this year. The holiday attraction, which began in 1991, has a train, rides, food and entertainment along with the light displays. (Heidi Knapp Rinella/Las Vegas Review-Journal)
Navigating the new I-515 southbound to 215 Beltway ramp configuration
After opening at 5 a.m. Tuesday, Dec. 18, 2018, the new Interstate 515 southbound to the 215 Beltway westbound freeway ramp configuration caused confusion amongst motorist. Here’s how to navigate the new ramp. (Mick Akers/ Las Vegas Review-Journal).
TOP NEWS
News Headlines
ad-infeed_1
ads_infeed_2
Local Spotlight
Home Front Page Footer Listing
Circular
You May Like

You May Like