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Icahn-Controlled Company Buys Flamingo Laughlin for $170 Million30 November 2005
By Howard Stutz
The gaming arm of the Carl Icahn-controlled American Real Estate Partners announced Tuesday it had bought the Flamingo Laughlin from Harrah's Entertainment for $170 million.
American Real Estate Partners, owners of the Stratosphere and two Arizona Charlie's casinos in Las Vegas and the Sands in Atlantic City, also bought an undeveloped 7.7-acre parcel in Atlantic City in the deal.
The deal is subject to regulatory approval and isn't expected to close until the middle of next year.
The Flamingo, opened in 1990, is Laughlin's largest hotel-casino, with 1,907 rooms and a 57,000-square-foot casino.
"What intrigues me about the property is that in smaller gaming markets, in order to win you should have mass," American Real Estate Partners Chief Executive Officer Richard Brown said. "Not only does (the Flamingo) have the most amount of rooms, but it also has the best location."
Brown said the property will be renovated and get a new name and theme. The company can use the Flamingo name for up to six months after the sale closes.
"I would say, yes, it does need some refurbishing," Brown said of the Flamingo which became part of Harrah's in June when the company completed its $9 billion acquisition of Caesars Entertainment.
Harrah's spokesman David Strow said the company had been entertaining offers for the Flamingo Laughlin since the Caesars purchase because the property didn't fit the company's overall future plans.
Harrah's remains part of the nine-casino Colorado River community, however, through its ownership of Harrah's Laughlin, which opened in 1988 and is the town's second-largest property with 1,560 rooms and a 55,000-square-foot casino.
"We had a number of offers and we are happy with the price we received," Strow said. "(Flamingo Laughlin) was a nonstrategic asset for our company."
Harrah's still owns the Flamingo Las Vegas on the Strip.
American Real Estate Partners, based in Mount Kisco, N.Y., is 87 percent controlled by Icahn. In addition to its casino holdings, the company owns residential subdivisions, condominiums, hotels, and golf courses across the United States.
Brown said the company had been exploring expanding its casino division.
"We've looked at everything so I can't say that we targeted this particular market or that particular market," Brown said. "We look at every deal that comes on the market and we make strategic acquisitions."
Brown said he believes Laughlin is returning to the growth the community experienced back in the late 1980s and early 1990s.
"Residential development is booming and we think the Flamingo fits into our customer profile of those who appreciate a value-oriented market," Brown said.
Laughlin, which had $594.8 million in total gaming revenues in 2004, hasn't added a new casino since 1994, when the River Palms opened as the Gold River.
The sale is the second transaction this year involving a Laughlin casino; Landry's Restaurants closed on its purchase of the Golden Nugget Laughlin in September.
In the most recent reports from the Nevada Gaming Control Board, Laughlin's casinos had gaming revenues of $49.6 million in September, an increase of 4.68 percent compared with $47.4 million for the same month in 2004.
For the year, gaming revenues in Laughlin have increased every month compared with the previous year except in February, when revenues were off 2.49 percent. In March, the figures rebounded to a 10 percent increase.
The Atlantic City parcel is adjacent to Sands, which would position American Real Estate Partners for future development there.
Harrah's said two weeks ago that it would spend $550 million to expand Harrah's Atlantic City.
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