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Sahara buyer sees new life for old resort5 March 2007
LOS ANGELES AND LAS VEGAS, Nevada -- Los Angeles entrepreneur Sam Nazarian spent close to three years trying to strike the right casino deal in Las Vegas. But his interests kept returning to the aging Sahara.
Nazarian, founder and co-owner of SBE Entertainment Group, said Saturday that the Strip's northern end is bursting with potential, which was the key factor in buying the 55-year-old Moroccan-themed hotel-casino.
"There's a tremendous opportunity for this property," said Nazarian, 31, whose company operates hotels, nightclubs, restaurants and a Hollywood film division.
"The Sahara is located close to the Las Vegas Convention Center and is going to be surrounded by high-rise condominiums, which will be a great audience for what we plan to offer," Nazarian said. "The Sahara just needed someone with fresh ideas who can breathe a little life into it, and we believe we're the company to do that."
Late Friday, Nazarian, in partnership with San Francisco-based private equity firm Stockbridge Real Estate Group, signed an agreement to purchase the Sahara from the family of the late casino pioneer William Bennett. Nazarian said negotiations took almost a year to complete.
The purchase price was not made available, but sources close to the deal said the transaction was valued between $300 million and $400 million for the 1,720-room Sahara, which has an 85,000-square-foot casino and sits on a 17.45-acre parcel bordered by the Strip, Sahara Avenue and Paradise Road.
Nazarian said he couldn't discuss specific plans for the hotel-casino until the sale closes.
He said Navegante Management Group, operated by veteran casino executive Larry Woolf, would run the Sahara's casino when the deal is complete.
In addition, Nazarian and Stockridge both expect to submit applications for licensure with the Gaming Control Board.
Nazarian's SBE Entertainment put up a portion of the equity and will serve as the Sahara's operating partner. Stockridge, which has completed more than $10 billion in private equity deals over the past decade, will have majority ownership.
Terry Fancher, the executive director of Stockridge, said the company believes in the vibrancy of the Las Vegas hotel market. The deal is Stockridge's first casino transaction. The company owns two horse racing tracks in California, Hollywood Park near Los Angeles and Bay Meadows south of San Francisco.
"SBE is a company with big ideas, and they have the operating expertise to help the Sahara capitalize on the growth in Las Vegas," Fancher said. "They will bring some exciting plans to the table."
Nazarian said the growth on the northern end of Strip, including Boyd Gaming Corp.'s redevelopment of the Stardust site into the $4.4 billion Echelon Place and more than 2,200 high-rise condominium units being built or already completed in the vicinity, offers the Sahara an excellent customer base.
"In the long run, I like their location," said Brian Gordon, a partner in Applied Analysis, a Las Vegas-based financial consulting firm. "This deal adds a tremendous level of investment to the Strip's northern end."
Nazarian's company operates 17 hotels, including the Ritz Plaza in Miami's South Beach area and Le Meridien in Beverly Hills. His nightclub and restaurant operation will include 10 trendy locations around Los Angeles by the end of the year.
He hopes to bring a similar formula to the Sahara.
"The main thing is to really upgrade the food and beverage outlets and give the property a new design and look on all levels," Nazarian said. SBE has an in-house design team and also works with designer Philippe Starck, with whom the company has a multiyear exclusive agreement for hotel and restaurant concepts in North America, Canada, the Caribbean and Mexico.
"Al Hummel (general manager of the Sahara since 2003 and Bennett's brother-in-law) said the Sahara just needs a new thought process," Nazarian said. "With the expected growth at the northern end of the Strip, the potential is out there for us to capture."
Nazarian and Stockbridge explored the possibility of buying the other two Sahara parcels, almost 26 acres across the Strip and 11 acres east of the Sahara on Paradise Road. However, the partnership wanted to concentrate solely on the Sahara.
"We're willing to put the capital into the Sahara that will help SBE make it an exciting resort," Fancher said.
John Knott, executive vice president of the Global Gaming Group for CB Richard Ellis, which was retained last year by the Bennett family to sell the Sahara, said Saturday that the other two parcels remain on the market for potential buyers.
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