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Chris Jones

Property Owners Lined Up for Payoff

29 March 2005

LAS VEGAS -- It's one of the last and largest undeveloped parcels within a stone's throw of the Strip.

And after standing pat for 16 1/2 years, its owner appears ready to cash in while the Las Vegas real estate market remains hot.

Los Angeles-based Weststate Land in October 1988 paid approximately $5.73 million to complete a deal that included more than 58 acres west of Interstate 15 and north of Russell Road.

In February 2004, the company secured an adjacent 4.2 acre parcel for an additional $8.3 million, giving Weststate Land nearly 63 acres of contiguous, hotel-casino-zoned property in the shadows of Luxor and Mandalay Bay.

Signs recently posted on the lot suggest it's now for sale, and one local expert speculated it could command between $440 million to $750 million if sold in its entirety.

"A parcel of that size, in that proximity to Las Vegas Boulevard, is very rare," said Brian Gordon, a partner with Applied Analysis, a Las Vegas-based financial consulting firm. "I can't think of another one that's been assembled that could be acquired in one single transaction. And there's a premium for that type of property."

The most-recent comparable land deals were Steve Wynn's April 2000 acquisition of the 234-acre Desert Inn, and the subsequent purchases of several nearby homes and a golf course. Those deals, which cleared the way for Wynn Las Vegas, were valued at approximately $386 million, Wynn representatives said this week.

Separately, Boyd Gaming Corp. in November spent $43 million to buy 13 acres behind the Stardust.

But Stripfront land has recently been valued at $15 million to $20 million per acre, while nearby land south of the Las Vegas Beltway has been valued in the neighborhood of $1 million to $3 million per acre, Gordon said.

Though it's off the Strip, Gordon expects the Weststate Land would fetch a significant price.

"This type of property could range anywhere from $7 million or $8 million to up to $10 million or $12 million an acre," Gordon said, discounting any unforeseen zoning or environmental snags.

"On that size of a site, you could get a hotel, a gaming component as well as high-density residential condominiums."

The site's proximity to Mandalay Bay's massive convention center could also add to its value thanks to that venue's ability to consistently attract midweek visitors. Bridges spanning I-15 are already in place along the parcel's northern and southern borders, offering easy access to the Strip and Frank Sinatra Drive.

Calls placed Friday to the telephone number printed on signs posted at the Weststate Land site were answered by EJM Development, a California limited partnership. Its address on file with the Nevada secretary of state matches that of Weststate Land's records filed with the Clark County assessor.

Telephone messages left for EJM partner Gene Monkarsh, who oversees the company with partner Jerry Monkarsh, were not returned Friday.

Signs posted on the site say it's zoned for hotel-casino use. Chuck Pulsipher, a Clark County planning manager, said Friday Weststate Land's site would not be affected by Senate Bill 208, a 1997 law that limits the expansion of neighborhood gaming sites. The site could also include apartments or other mixed-use developments under its current zoning classification, he added.

Despite its proximity to McCarran International Airport, Pulsipher does not expect future development of the Weststate Land site to be impeded by height restrictions so long as new construction does not surpass The Hotel at Mandalay Bay's nearby 489-foot tower.

Jim Bowen, vice president and chief financial officer of Las Vegas' Hard Rock Hotel, said Friday he hasn't examined Weststate Land's available parcels. Speaking generally, he said off-Strip resorts face different challenges than those on Las Vegas Boulevard South.

Despite such challenges, Bowen added off-Strip resorts can thrive if they're willing to pay the price.

"When you get off the Strip, you have to spend more (on marketing and other promotions) to get people in your door, unless you've got something very unique," Bowen said.

Bowen said mixed-used developments similar to American Nevada Co.'s The District or MGM Mirage's proposed Project CityCenter could be a good fit for the Weststate Land site.

"Something like that might be appealing because it's so centrally located," Bowen said.