Crown Resorts to Work with Oaktree Capital, former Wynn Resorts Executive on 34.6-acre Project
Crown Resorts Ltd. , the casino company controlled by Australian billionaire James Packer, plans to work with Oaktree Capital Management LP and former Wynn Resorts Ltd. executive Andrew Pascal on a Las Vegas Strip casino project.
The investors are part of a growing circle betting on a recovery in the world’s second-largest gambling market, after the financial crisis halted a building boom in the city.
The parties bought a controlling interest in a 34.6-acre piece of land on Las Vegas Boulevard, according to a joint statement issued Monday. Crown, the venture’s majority owner, has spent US$280 million on the project, including the land acquisition, according to its statement to the Australian Securities Exchange. The investors projected breaking ground late next year and finishing the project in 2018.
The site had been owned by Israeli businessmen whose plans to build a casino-resort modeled after New York’s Plaza Hotel were upended by the recession. It is adjacent to a site where Genting Bhd. plans to build a $4 billion casino-resort. The Malaysian company took over Boyd Gaming Corp.’s Echelon project, which had been halted in 2008 because of the financial crisis.
Mr. Packer felt the pangs of the financial crisis personally. Several of his Las Vegas investments went awry during the period, including one in the Fontainebleau casino-resort just up the road from his new project’s site. Fontainebleau Las Vegas halted construction and sold its furniture after entering bankruptcy protection in 2009. Crown and Mr. Packer settled a lawsuit filed against them by a group of lenders to that project in June.
Crown meanwhile has focused on casino ventures on the other side of the world, including in the Philippines, Sri Lanka, at home in Australia and in the world’s largest gambling hub, the Chinese territory of Macau.
But casino executives, investors and analysts lately have been talking up the Las Vegas Strip’s prospects again. The $415 million SLS Las Vegas, built on the site of the former Sahara hotel and casino of the Rat Pack era, is set to open this month. In May private-equity firm Blackstone agreed to pay $1.7 billion to Deutsche Bank for the Cosmopolitan of Las Vegas, another Strip casino-resort that ran into financial trouble during the downturn. Caesars Entertainment Corp.and MGM Resorts International MGM also have invested in casino and entertainment projects on the Strip recently.
Union Gaming Research analyst Robert Shore said his firm has seen “a clear positive demonstrative change” in business in Las Vegas over the past six to nine months. Gambling revenue on the Las Vegas Strip rose 3.5% in the first half of this year over a year earlier and revenue per available hotel room in the area rose 9.9%, official data show.
“All the development coming to Las Vegas collectively lends credence to the Strip recovery story, which was further highlighted by today’s news, as very smart and highly sophisticated gaming investors and developers are looking to deploy their capital in the market,” Mr. Shore said.