Following two days of meetings with casino company leaders, one analyst said Thursday it was “highly unlikely” a regional gaming operator “makes a concerted effort” to acquire a Las Vegas Strip resort.
Deutsche Bank gaming analyst Carlo Santarelli reported that assessment in a research note following two days of meetings with casino operators at his company’s Leveraged Finance Conference in Scottsdale, Arizona.
Santarelli said that interest “from nontraditional buyers for Strip assets remains very strong.”
The comment comes three days after IC 3700 Flamingo Road Venture LLC – a company controlled by a principal of New York-based Imperial Companies – announced the acquisition of the off-Strip Rio resort from Caesars Entertainment for $516.3 million. Imperial Companies has traditionally focused on residential and other hospitality properties.
Santarelli called the emergence of new Las Vegas gaming industry landowners “healthy for the industry as a whole,” but makes it difficult for financial analysts “to pencil out Strip deals.”
Caesars, which is being acquired through a $17.3 billion merger with Reno-based Eldorado Resorts, has nine Strip-area resorts. Eldorado executives have said one or two of the properties could be sold. With Rio out of the picture, analysts said the focus remains on Planet Hollywood.
Meanwhile, MGM Resorts International created an ad-hoc board committee in January to consider and unlock the value in the company’s real estate holdings. It’s been reported that Circus Circus could be sold to TI owner Phil Ruffin, and the company is looking at a potential $7 billion sale and leaseback of the Bellagio and MGM Grand Las Vegas to real estate conglomerate Blackstone Group.
On Tuesday, Union Gaming Group analyst John DeCree told investors that five Strip-area resorts are on the market, including the Cosmopolitan of Las Vegas and Planet Hollywood.
Speculation has centered on several small regional casino operators, including Rhode Island’s Twin Rivers, Colorado’s Century Casinos, and Las Vegas-based Maverick Gaming, and a pool of high-profile buyers, including Boyd Gaming, Penn National Gaming, Houston billionaire Tilman Fertitta, and Ruffin.
Santarelli seemed to dismiss the speculation.
“While media headlines have heightened the perception of a mergers and acquisitions extravaganza in the group, the real estate owners and gaming operators we met with noted that little has changed,” Santarelli said.
Also, the analyst had a positive view of the nation’s regional gaming markets. He said the meetings with operators and “found the refrain of a broadly healthy regional gaming consumer to be similar across each of the meetings.”
The casino operators complained that gaming revenue performance found in individual state reporting, “is driving improper conclusions as it pertains to the health of the regional gaming environment.” He noted the third quarter numbers include “a somewhat choppy July, followed by a strong August, and some softness in September, primarily driven by the calendar.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
