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LAS VEGAS, Nevada -- After a two-month, multibillion-dollar bidding war that focused all eyes on the south end of the Strip, attention has now reversed field 180 degrees north.
The Tropicana is off the market, claimed by Kentucky-based Columbia Sussex Corp. last week as part of a $2.75 billion buyout of Aztar Corp. Now, the Sahara is the object of attention for casino companies seeking to expand their Las Vegas portfolio or gain a location on the world-famous boulevard.
Gaming and real estate analysts said they think there will be an overabundance of purchase offers for the Sahara, which is operated by the family of late casino pioneer William Bennett.
Gordon Gaming, which manages the Sahara, retained commercial real estate company CB Richard Ellis to sell the 1,720-room hotel-casino.
In September, before bringing CB Richard Ellis aboard, the company sent a letter to one prospective bidder. The Bennett family wanted at least $700 million for the Sahara and three land parcels; the 17.45-acre Sahara site, 25.84 acres directly across from the hotel on Las Vegas Boulevard and 11.31 acres east of the Sahara on Paradise Road.
Recent Strip real estate transactions have been valued between $20 billion and $30 billion an acre.
"With what we've seen in recent weeks and with the premiums being paid, ($700 million) is not out of line," said Brian Gordon, a partner in Las Vegas financial consulting firm Applied Analysis. "There are just a limited number of sites left on the Strip."
With roughly 55 acres on the three separate land parcels at the Strip's far northern end, the Sahara presents an attractive development opening for potential suitors.
Most analysts put Las Vegas-based casino operators Pinnacle Entertainment and Ameristar Casinos at the top of any list of potential buyers. Both companies lost out on Aztar and have been seeking entry into the Las Vegas market.
"I'm sure there is going to be a lot of interest in the Sahara," Deutsche Bank gaming analyst Marc Falcone said. "Every day, the opportunity to gain a spot on the Las Vegas Strip becomes more limited. But it's also really down to just a few companies where it makes sense to put together this deal. If the recent bidding war for Aztar has told us anything, it's that the cost of entry has increased."
Las Vegas-based real estate consultant John Restrepo said the scarcity of investment opportunities on the Strip makes the Sahara, one of the Strip's older hotel-casinos, an alluring purchase target.
"The development is heading northward," Restrepo said. "The Sahara offers a tremendous opportunity to anchor the north end of the Strip while also serving as the southern gateway to downtown Las Vegas. It's an interesting linkage."
Restrepo said the migration of Strip building to the north was buoyed by the planned $4 billion redevelopment of the 63-acre Stardust site announced this year by Boyd Gaming Corp.
Plans were revealed a year ago that Turnberry Associates and former Mandalay Resort Group boss Glenn Schaeffer would build Fontainebleau Las Vegas, a $1.5 billion resort based on the Miami Beach hotel of the same name, near the Sahara focused interest in that direction.
Harrah's Entertainment last year bought the Imperial Palace for roughly $20 million an acre. Columbia Sussex is paying an estimated $22 million to $25 million an acre for the Tropicana. In today's market, approximately $13 million an acre for the Sahara is not out of line, Restrepo said.
"Considering the scarcity of the investment opportunity, I think that's a pretty reasonable amount to pay for a Strip location," Restrepo said.
Sources at CB Richard Ellis would not comment on the matter and Sahara Chief Executive Officer Al Hummell didn't return phone calls.
There are several differences, however, between the Tropicana and the Sahara that could influence potential buyers.
The Tropicana has aged over the years, with Aztar Corp. doing little in the way of refurbishments.
The Sahara, however, has undergone a face lift since Bennett's passing. Rooms inside two of the three hotel towers have been remodeled, carpet was changed throughout the casino and slot machines were upgraded to include ticket in-ticket out capabilities. Other public areas of the property were either remodeled or spruced up.
Sahara marketing director Ron Garrett said many people are visiting the property.
Garrett said the General Motors Drive at the Sahara, built on the 11-acre site east of the property, where customers can test drive General Motors products, and a connection to the Las Vegas Monorail have spurred customer visits.
The Sahara is a single entity, unlike the Tropicana, which was one of five Aztar Corp. casinos.
Also, the Tropicana site is 34 contiguous acres, but analysts don't see the Sahara's divided parcels as a negative.
"I think it's a great opportunity for someone to assemble a large portion of acreage in the resort corridor," Restrepo said.
Analysts said a casino operator with the financial resources could run the Sahara and build another casino across the street on the 25-acre patch.
Gordon, however, said it was easier to develop on a site like the Tropicana.
"(The Sahara is) much more difficult because you don't have that contiguous property, but that doesn't make it any less valuable," Gordon said.
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