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Best of Howard Stutz

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Howard Stutz
 

SBE Entertainment secures last of $415 million in financing for Sahara

13 February 2013

LAS VEGAS -- Nearly two years after closing, the Sahara is finally getting its long-awaited face-lift.

Los Angeles-based SBE Entertainment Group, LLC has secured the last piece of the $415 million in financing needed to transform the Strip resort into the SLS Las Vegas.

Groundbreaking - for work such as interior construction and exterior design - is scheduled to begin today. The 1,620-room boutique hotel-casino has a planned opening in the fall of 2014.

"I know these kinds of projects usually begin with an explosion," SBE Chief Executive Officer Sam Nazarian said Tuesday. "We've been on the property since it closed, maintaining the building and the facility. This week, we'll start the interior push."

SBE and Stockbridge Capital Group of San Francisco have owned the site at the corner of the Strip and Sahara Avenue since 2007. The Sahara closed in May 2011 after 59 years in operation when the aging property was "no longer economically viable."

All the Sahara's furnishings and memorabilia were sold in an estate sale.

SBE, which operates nightclubs and restaurants in major U.S. cities, announced last April it secured $300 million in financing to transform the Sahara into the SLS, which is the company's luxury boutique hotel brand.

The remaining financing came through the EB-5 program, which was enacted by Congress in 1990 to encourage foreign investment into U.S. businesses that would create or save jobs.

Studies conducted by SBE showed the SLS development would create 8,500 direct or indirect jobs, including construction work, and 2,500 permanent positions once the property opened. SLS Las Vegas is expected to infuse $400 million into the local economy.

Nazarian said the money raised through the EB-5 funding was "far above" what had been expected, which will allow SBE pay down its senior note on the property.

"We've taken on the role of igniting the north end of the Strip," Nazarian said. "We're close to downtown and the reimagination that (Zappos.com CEO) Tony Hsieh is bringing to that area. We also want to be a place for locals to visit."

In an emailed statement from SBE's public relations firm, Senate Majority Leader Harry Reid, D-Nev., said the investment in SLS "will create thousands of jobs, infuse millions into the local economy, and help bring new energy to the north end of the Strip."

Reid said he has supported the project "from the outset and am so pleased that SLS Las Vegas is officially breaking ground."

SLS President Rob Oseland said the property would also appeal to convention delegates because of its proximity to the Las Vegas Convention Center.

"Today is a day we've all been waiting for," Oseland said. "We're thrilled to be a part of reinvigorating a legendary section of the Strip."

Nazarian said the SLS Las Vegas mirrors SBE's efforts with its other SLS hotels in Los Angeles and Miami's South Beach and the under-construction SLS New York by taking an older, historic structure and redeveloping the property.

In a statement, the company said other SLS hotels are planned for Philadelphia, Seattle, Boston and Houston. SLS Las Vegas will be the largest SLS hotel in the company.

"SLS will be a virtual community," Nazarian said. "We will have SLS hotels operating in every core major market in the U.S."

SBE will operate all the amenities inside the SLS, including the restaurants, nightlife attractions and the retail.

Four of SBE's restaurant brands, The Bazaar by José Andrés, Katsuya by Starck, Umami Burger and The Griddle Café, will operate at SLS, along with nightclubs Shelter and The Sayers Club.

In November, SBE announced an agreement with Los Angeles retailer Fred Segal to place seven different outlets throughout the property.

In November 2011, Clark County commissioners approved a tentative plan for the Sahara remodeling that reduced the hotel's original size by more than 100 rooms.

Nazarian said the three existing hotel towers would remain, but two will be stripped down, a low-rise hotel structure will be torn down, and the 2,500-space parking garage would remain in place.

Gensler Architects and Penta Building Group have been hired to oversee the renovation.