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Chris Jones

Deal in Works For Strip Water Park Site

5 July 2006

LAS VEGAS, Nevada -- Wet 'n Wild's former landlord said it has struck a deal to sell the 27-acre north Strip property for $450 million, and the buyer on Friday expressed its hope to build a $4 billion megaresort atop the longtime water park site.

A Securities and Exchange Commission filing from Thursday shows that Las Vegas-based Archon Corp. plans to sell the site next year to LVTI, a low-profile limited liability company incorporated in Delaware.

"The Wet 'n Wild site was like a gift," Chris Milam, an Austin, Texas-based developer who owns LVTI, said Friday. "There's nothing on it that needs to be torn down, and you get frontage on Las Vegas Boulevard and Paradise Road.

"Five years ago the north Strip was the lonely child, but now it's where everything is happening."

Milam's company would use private equity investors to build the 4,500-suite resort. Construction would begin in 15 to 16 months, with an approximately 3 1/2-year build out. He expects the as-yet unthemed property to open in fall 2010 or spring 2011.

Milam said the Paul Steelman Group will design the casino, while RTKL, a Baltimore-based retail design firm, will plan a shopping component. Skidmore, Owings and Merrill will design the hotel tower, he added.

Milam's group plans to operate the resort for approximately two years. It would then sell the property to an established gaming operator, or take the company public through a stock offering, he said.

"We've never done gaming before," Milam said, adding his partners would prefer to build up the property's value and cash out rather than act as a long-term operator.

Archon's SEC filing indicates that LVTI on Tuesday paid a refundable $5 million deposit.

Should the deal progress beyond a due diligence period ending July 24, a second deposit worth $40 million will be due Sept. 22, or whenever Archon mails its stockholders to confirm the deal at a later, undetermined date.

Monthly payments of more than $2.19 million would begin approximately 13 months after the $40 million is paid.

LVTI can only exercise its option to buy the land during a six-month period that begins one year after Archon receives the $40 million.

Should the company back out after July 24, Archon could keep the $45 million under conditions outlined in the deal.

Calls placed to Archon's office on Friday were referred to the voice mailbox of a corporate tax manager; she did not respond before deadline.

Milam, who is also president of an Austin company called IDM Properties, was recently linked to another Las Vegas resort development that failed to launch.

In October, then-Hard Rock Hotel owner Peter Morton named IDM developer of a $1.25 billion resort condominium project at Las Vegas' Hard Rock Hotel. That project was scrapped before Morton two months ago sold the Hard Rock Hotel and surrounding land to Morgans Hotel Group for $770 million.

Milam said his experience with Hard Rock whetted his appetite to do another project in Las Vegas. He said his company is also talking with Morgans in hopes of developing a condo project where Morton once planned to build.

Archon formerly owned the Sante Fe on Rancho Drive, though it sold that locals casino to Station Casinos six years ago.

Archon continues to own and operate the Pioneer Hotel & Gambling Hall, a 400-room property in Laughlin.

Wet 'n Wild, an aquatic amusement park, operated just south of the Sahara from 1985 through 2004. The popular summertime playground had several owners over the years, though in recent years it leased the site from Sahara Las Vegas Corp., an Archon subsidiary that has controlled the site since October 1995, according to Clark County property records.

In July 2004, Archon told Newport Beach, Calif.-based park operator Palace Entertainment to vacate the site at the end of the summer.

Archon initially planned to build a 3,250-room megaresort on the Wet 'n Wild site but that development never moved forward. The sole signs of life since spotted at Wet 'n Wild are the numerous semitrailers that temporarily park on-site between carrying goods to and from the nearby Las Vegas Convention Center.

Paul Lowden, Archon's chairman and president, controlled nearly 4.9 million shares, or approximately 76 percent of Archon's common stock, according to an SEC filing recorded May 4.

The filing said Lowden also owned 10,000 shares, or 18 percent, of its preferred stock.