Station Casinos has petitioned the City of North Las Vegas for a second one-year suspension of its “non-restricted gaming, non-restricted gaming liquor, and full liquor off-sale business licenses” at Texas Station and Fiesta Rancho, a clear indicator that it doesn’t plan to reopen the pair in the near future. The two casinos closed on March 17, 2020, and have not done any business since then. Neither has Fiesta Henderson, whose fate remains unknown at the present.
Palms Casino Resort also is shuttered, pending its sale to the San Manuel Band of Mission Indians, a deal whose terms have not entirely been finalized. As CDC Gaming disclosed last week, the ownership of some high-value Palms artwork is split between Station and Frank and Lorenzo Fertitta, and it is unknown whether San Manuel will buy any of it or whether it comes with the $650 million deal.
The shutdown extensions at Fiesta Rancho and Texas Station would be effective until 2022, at which time Station will be at a nodal point, having to decide between reopening and selling the casinos, as a third suspension is impermissible by North Las Vegas regulations. In first-quarter investor calls, Station executives have raised the prospect of selling closed casino assets — after removing their gaming entitlements, forestalling competitors from moving into the vacuum.
In a May 13 conference call with JP Morgan analysts, CEO Frank Fertitta III, Vice Chairman Lorenzo Fertitta, and Chief Financial Officer Stephen Cootey announced they would be moving ahead with the long-delayed Durango Station, located in the fast-growing southwest Las Vegas Valley along the 215 Beltway. Groundbreaking is planned for sometime in the first quarter of 2022, with completion expected in the last quarter of 2023. The budget is estimated to be between $400 million and $500 million. The tentative plan is for 120,000 square feet of gaming floor and a 1,000-room hotel, 216 feet in height.
The budget would be a substantial cutback from Station’s most recent casino projects, Red Rock Resort ($925 million) and the Palms ($662 million). Station leadership cited Durango Station’s surrounding demographics as an incentive to proceed, noting a high Asian-American population in the area and the absence of significant competition within a five-mile radius. Also, the population density in the three-mile radius around Durango Station would be higher than that for Red Rock Resort.
Between the relatively low budget for the casino and the demographics, JP Morgan lead analyst Joseph Greff projected a 15-20 percent return on investment for Durango Station, an auspicious metric in the casino industry. The return would be enhanced further if Station, per its intentions, sells 23 acres of the site’s 73 for residential development. The project will be funded out of internal cash flow, including the proceeds from the Palms sale.
