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Howard Stutz
 

Sands to join condo market

7 November 2006

LAS VEGAS, Nevada -- Las Vegas Sands Corp. is the latest player in the Strip's growing high-rise condominium market.

The casino operator will ask the Clark County Commission Wednesday for approval to construct a condominium tower on a portion of the land that will house the $1.8 billion Palazzo project at the corner of the Strip and Spring Mountain Road.

According to documents filed with Clark County, Las Vegas Sands is seeking permission to build a 632-foot tower that would allow for 849 condominiums. Each unit would include a kitchen area.

However, during the company's quarterly conference call last week, Las Vegas Sands Executive Vice President Brad Stone said the condominium tower would have 370 "ultra-luxury" units and the building would be at least "50 stories."

Stone said the condominium tower would be constructed atop the building that will house Barney's, a New York-based high-end men's and women's apparel store that is part of the Palazzo's retail development.

The 3,000-room Palazzo, combined with The Venetian next door, gives Las Vegas Sands more than 7,000 hotel rooms and more than 800,000 square feet of retail space on 63 acres. The Palazzo is scheduled to open next year.

The condominium tower, Stone said, could mean increased visitation to the two casinos.

"We certainly believe this is a premier piece of real estate," Stone said on the conference call. "Now we're talking about how to possibly brand that premier piece of real estate. It provides an opportunity for us to utilize (air) rights that we have and maximize the value. It also is obviously accretive to the visitation to the properties."

Las Vegas Sands officials did not want to comment on the project Monday, saying they wanted to address the matter initially with Clark County commissioners.

Stone, however, told analysts the potential residential project could house some of the Strip's most expensive condominium units.

"It's our belief, and people we've talked to that are involved in this business, that these units, with its location right on the Las Vegas Strip, tied into The Venetian-Palazzo complex, with our various amenities, such as Canyon Ranch, our restaurants, our shopping centers, etc., could yield a very high sale per square foot in terms of those condominium products," Stone said.

If the company gets the go-ahead, Las Vegas Sands would join MGM Mirage in the high-rise residential market. MGM Mirage is selling the Signature towers adjacent to the MGM Grand and plans to develop 2,900 high-rise residential units as part of the $7 billion Project CityCenter.

Deutsche Bank gaming analyst Bill Lerner said Monday the planned Las Vegas Sands project can't be viewed as part of a potentially oversaturated Las Vegas high-rise residential market. The location, he said, as part of the Venetian-Palazzo complex and across from Wynn Las Vegas and the under-construction Encore, is a premier address.

"This is geographically well-placed and will be well-branded," Lerner said. "It's a much smaller footprint than CityCenter. From my perspective, it's a way for the Las Vegas Sands to monetize their assets, and in this instance, the air rights above Barney's."

Lerner said the potential sales for a Las Vegas Sands residential project could have the same success as the sold-out Trump International, currently being built behind the New Frontier.

"For Las Vegas Sands, this is another way to buy down development costs and improve returns," Lerner said. "I'm sure their peers will follow."

Also on Wednesday, Las Vegas Sands will ask commissioners for permission to reduce the number of parking spaces the condominium tower would require by 12 percent, from 547 spaces to 481 spaces.

In an agreement last year with Clark County, Las Vegas Sands planned to build 11,795 parking spaces for use by The Venetian and Palazzo customers. In its filing with the county, the company said it would now provide a total of 12,448 total parking spaces, an almost 28 percent reduction from the 17,235 spaces that the code says the property should have.