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Howard Stutz

New Frontier owner rebuts web report of sale

21 March 2007

LAS VEGAS, Nevada – A report on a Web site claiming the New Frontier is being sold for more than $1.5 billion was rebutted Tuesday by owner Phil Ruffin.

The rumor that El Ad Properties may pay as much as $40 million an acre for the property sent shares of Boyd Gaming Corp. and MGM Mirage higher, though.

While Ruffin confirmed he has been in discussions with El Ad Properties, an Israeli-owned real estate investment group that owns several New York City buildings, he said no deal has been reached.

"There is no agreement and nothing is on paper," Ruffin said in an interview from his offices in Wichita, Kan. "Everything is very preliminary. I think they are just kicking the tires and checking the place out."

In 2005, El Ad paid $675 million for New York's landmark Plaza Hotel. It is in the middle of an extensive renovation to the property, which includes converting some of the units into high-priced condominiums.

Ruffin, who has been operating the 984-room Western-themed New Frontier since 1998, has been seeking an equity partner to help finance a $2 billion redevelopment of the 38-acre site.

Plans submitted to Clark County show the New Frontier being demolished and replaced by Montreux, a 2,750-room hotel-casino, themed after the Swiss resort town near Lake Geneva.

Asked if he would sell the New Frontier rather than take on a partner, Ruffin was noncommittal.

"You always want to price out and see what you have," Ruffin said. "We're playing with the price right now, but nothing is final."

According to a report posted Monday on Web site, sources said El Ad Properties was willing to pay as much $40 million an acre for the 38-acre New Frontier site. Ruffin said the price listed in the Web report "seemed a little high."

The report had gaming analysts reworking numbers on their calculators over the value of Strip real estate, especially for companies like Boyd Gaming Corp., which has an 87-acre parcel for its $4.4 billion Echelon development, and Wynn Resorts, which controls 142 acres.

Most analysts have valued prime Strip land at between $20 million and $30 million an acre.

"While unconfirmed, and almost hard-to-believe, such a transaction could have a profound impact on valuations of Las Vegas Strip operators with significant land holdings," Deutsche Bank gaming analyst Bill Lerner said in a note to investors.

Prudential Equity Group gaming analyst Joe Simkins said, "While our sources in the Las Vegas real estate community confirm that there has long been interest in the property, we are unsure whether the transaction will actually go forward."

About 3 1/2 acres on the backside of the New Frontier site is being used for the $600 million Trump International, a 1,282-unit condominium and condo-hotel tower.

Ruffin is partners with New York billionaire Donald Trump on the 64-story project, which is expected to open in 2008.

An announcement on an identical 1,282-unit second Trump tower is expected to be the focus on the April 8 episode of "The Apprentice," Trump's reality television series.

Boyd and MGM Mirage, which is developing the $7 billion Project City Center on 66 acres, stand to benefit if Strip real estate is valued as high as $40 an acre.

Boyd shares rose $2.54, or 5.69 percent, to $47.15 on New York Stock Exchange. MGM Mirage was up $2.84, or 4.19 percent, to $70.64, its biggest gain in two months.