By Kate O'Keeffe
Crown Resorts Ltd., the casino company controlled by Australian
billionaire James Packer, plans to partner with Oaktree Capital
Management L.P. and former Wynn Resorts Ltd. executive Andrew
Pascal on a Las Vegas Strip casino project.
The investors are part of a growing chorus betting on a recovery
in the world's second-largest gambling market after the financial
crisis prematurely halted a building boom in the city, bringing it
to its knees.
The parties bought a controlling interest in a 34.6 acre piece
of land on the Las Vegas Boulevard, according to a joint statement
issued Monday. Crown, the venture's majority owner, has spent
US$280 million on the project so far including the land
acquisition, according to its statement to the Australian
Securities Exchange. The investors said they expect to break ground
in late 2015 and finish the project in 2018.
The site was formerly owned by Israeli businessmen whose plans
to build a casino-resort modeled after New York City's Plaza Hotel
were upended by the recession. It is adjacent to a site planned to
host a new $4 billion casino-resort by Malaysian gambling giant
Genting Bhd., which took over Boyd Gaming Corp.'s Echelon project,
halted in 2008 due to the crisis.
Mr. Packer felt the pangs of the financial crisis personally
with several investments in Las Vegas that went awry during that
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 off its furniture after falling into
bankruptcy protection in 2009. Crown and Mr. Packer only settled a
lawsuit filed against them by a group of lenders to that project in
June.
Meanwhile Crown has been 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 lately casino executives, investors and analysts 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 giant Blackstone agreed to pay $1.7 billion in cash
to Deutsche Bank AG 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
have also invested in various 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% during the first half of 2014 over the
previous year 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," said Mr. Shore.
Write to Kate O'Keeffe at kathryn.okeeffe@wsj.com
Corrections & Amplifications
Andrew Pascal is a former executive at Wynn Resorts Ltd. An
earlier headline on this story incorrectly said he was a current
executive.
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