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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Inside Gaming: Trump's second tower may wait

7 April 2008

LAS VEGAS, Nevada -- New York billionaire Donald Trump arrives in Las Vegas this week to cut the ribbon on his shimmering $1.2 billion Trump International Hotel & Tower.

Trouble, is the nongaming 64-story condominium and hotel may be the only building on the north side of Fashion Show Drive for a while.

Rising construction costs, tightening credit markets and the slowing economy may delay a second Trump Tower and a $6 billion version of New York City's Plaza Hotel, planned for a neighboring 34.5-acre parcel on which the demolished New Frontier once stood.

Trump said he hasn't decided on a start date for the identical 1,282-unit second tower, although the sales office is accepting reservations. The real estate mogul said he wants to close all sales on the first tower before the other building breaks ground. Sales, so far, have topped $1 billion, Trump said.

"I want to see where the markets are at," Trump said. "The credit markets are the worst anybody has ever seen."

Trump locked in construction costs on the Trump International before breaking ground in 2005. The project's cost increased when 3.5 acres were added to the site for the second tower.

A gaming analyst said a second Trump tower could have a budget 60 percent higher than the original due to rising construction costs.

Trump said he doesn't know the Plaza Hotel's status. The project is controlled by the Elad Group of New York. Last month, investors told an Israeli newspaper the development was on hold until the subprime lending crisis subsides. Elad's New York-based president, however, said the Plaza was on track.

Plaza Chief Operating Officer Dan Wade said he hopes excavation on the site will begin by the fall.

Although corner units of the Trump look down on an empty site, Trump is confident the Plaza Hotel will be completed.

"I know the Elad people, and they will build something tremendous," Trump said.

Las Vegas Sands Corp. Chief Financial Officer Robert Rozek announced his resignation last week after less than two years with the company, and some investors flinched.

Gaming analyst Steven Wieczynski of Stifel Nicolaus Capital Markets told them to relax.

"We do not believe Mr. Rozek is resigning due to any major internal issues," Wieczynski said in a note to investors. "We do not view this resignation as an indication that there is anything fundamentally wrong at Las Vegas Sands."

The company will be the second major gaming operation without a CFO. Slot machine giant International Game Technology lost its CFO in January when Maureen Mullarkey resigned. Sources said the company is close to naming a replacement.