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Arnold M. Knightly

Entertainer all shook up over talk of Strip casino

27 March 2008

LAS VEGAS, Nevada –- Longtime Elvis Presley impersonator Steve Connolly is eagerly awaiting the King's possible return to the Strip.

He may not have to wait too much longer. New York-based FX Real Estate and Entertainment is planning an Elvis-themed hotel-casino development for nearly 18 acres on the Strip across from CityCenter, according to a Securities and Exchange Commission filing this week.

Connolly, who has done tribute shows to the entertainer at the Aladdin, Riviera, Bally's, MGM Grand and Fitzgeralds, says the interest in Elvis is still high enough to make the resort a success.

"I think there is enough of a draw," said Connolly, who moved to Las Vegas from Boston 12 years ago. "He's sold billions of records and still made $50 million last year."

FX said the feasibility of the project will depend on its ability to raise capital through debt and equity financing.

The company acknowledged it doesn't have enough money on hand or through cash flows to fund the project.

Also, a series of leases held by various businesses occupying the land will have to be terminated or reworked with varying degrees of legal difficulty and additional costs.

The site, which stretches from the Harley-Davidson Café on the corner of Harmon Avenue to the Smith & Wollensky building just north of the MGM Grand, generated $21.4 million in revenue for FX mainly through rental income. The Hawaiian Marketplace, Travelodge and several retail shops also occupy the land.

The land was acquired through six separate transactions totaling $221.3 million, or $12.5 million per acre, between March 1998 and May 2005.

FX, which recently went public and is listed on Nasdaq (ticker: FXRE), declined to comment Wednesday beyond the filing.

Current construction cost for the proposed project is estimated at $3.1 billion, not including land costs, financing and additional pre-opening costs.

FX has a licensing agreement with Elvis Presley Enterprises allowing the company to use the name and certain assets from the entertainer's estate.

The project is being designed to "compete within the upper strata of the luxury market," according to the filing.

Construction is scheduled to begin the first quarter of 2009 with a targeted completion date of the fourth quarter 2012.

"Although we have determined the overall scope and design of our planned development ... we will continue to evaluate the design in relation to the demands of the Las Vegas market," the company wrote in the filing.

The first phase plans include an "Elvis-inspired" luxury hotel and casino and a separate luxury-branded hotel-condominium. FX will own and operate the 2,269-room hotel and 93,000-square-foot casino.

The casino is designed for nearly 2,200 slot machines and 130 table games but does not account for a high-roller room, poker room or a race and sports book.

A separate project, designed with 778 hotel rooms and 147 condominiums, will be operated by a joint-venture partner.

The project is also being planned to have approximately 206,000 square feet of convention space, 94,000 square feet of retail space, 14 restaurants and a 1,605-seat showroom.

Developers also hope to tap into the local market for Elvis-themed weddings. A planned wedding chapel would include several chapels, a bridal and flower shop, and wedding reception and banquet areas.

An interactive multimedia Elvis experience, a boutique and an Elvis memorabilia store are also planned for the project.

Connolly cites the success of the 24-hour Elvis channel on Sirius Satellite Radio and that Elvis had a No. 1 hit in 2002. A remix of a 1968 song "A Little Less Conversation" topped the music charts in 20 countries six years ago. It was used in the remake of "Ocean's Eleven" and commercials for Nike.

"I hope it is built," Connolly said. "Maybe they could give me a job for the next 20 years."