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Best of Liz Benston

Gaming Guru

Liz Benston

Boyd Adds to Bank of Land Near Stardust

24 November 2004

Boyd Gaming Corp. has acquired a 13-acre parcel next to the company's Stardust resort for about $43 million, which includes the assumption of about $16 million in debt. The parcel includes a Budget Suites motel, which Boyd will continue to lease back to the motel operator for another two years.

The site brings Boyd's ownership at the Stardust to 63 acres, rivaling the size of MGM Mirage's proposed $4 billion CityCenter hotel and condo development further south on the Strip.

Boyd spokesman Rob Stillwell declined to comment on the transaction, citing a confidentiality agreement.

The company is in the process of master-planning its Stardust site for future redevelopment into a possible megaresort. Officials have said they expect to reveal those plans sometime after Steve Wynn's Wynn Las Vegas resort opens across Las Vegas Boulevard in April.

Boyd was the logical buyer of the motel site, which is surrounded by the Stardust property, one analyst said.

The purchase "enhances one of the best future development parcels in Las Vegas at a very attractive $3.3 million an acre," Susquehanna Financial analyst Eric Hausler said in a research note.

With 63 acres, Boyd could develop "two large megaresorts or some mix of casino /high rise development," he said.

Hausler said he values the Stardust parcel at about $8 million an acre, taking into account its Strip frontage as well as interior land.

"We view land as the placeholder for future growth of (Boyd) in Las Vegas, as we expect it to be redeveloped at some point into a megaresort, not sold to another developer," he said. "With Strip land scarce, those companies that own large tracts of developable land have the best future development outlook, in our view, and Boyd is one of those companies with its holdings at the Stardust and Barbary Coast."