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Best of Liz Benston

Gaming Guru

Liz Benston

Silverton Owners Have Grand Plans

18 March 2005

LAS VEGAS -- More than seven years ago, one analyst complained that the financially troubled Silverton, then called Boomtown, was both "in the middle of nowhere" and "too close to Las Vegas" to capture much drive-by traffic on the way to the Strip.

Fresh from a $150 million upgrade and reeling from crowds that include new homebuyers and regular visitors from Southern California, the Blue Diamond Road hotel and casino is rolling the dice while they are hot on an ambitious master plan that could cost upwards of $2 billion. Such a move would rival Henderson's Lake Las Vegas development in scope.

Over the next several years, Silverton owners expect to develop the remaining 80 acres of land around the property into a mixed-use resort that would include a second locals casino, five or more different hotels, retail and entertainment venues and a mix of hotel-condominium and timeshare units.

The resort, which would be on a par with Station Casinos Inc.'s Green Valley Ranch Station Casino in Henderson, could cost in the neighborhood of $500 million and feature 1,000 hotel rooms. The property is considering up to 1,500 timeshare units, while hotel-condos that could be rented out by buyers are under consideration.

The master plan is the brainchild of Silverton General Manager Craig Cavileer -- a retail developer in Los Angeles who joined the Silverton in 1998 and assumed responsibility for development as well as operations.

Cavileer said he envisions a kind of development that doesn't yet exist in Las Vegas -- an indoor-outdoor experience much larger than American Nevada Company's condominium and retail development in Henderson called The District and more comparable with larger retail areas such as Santa Monica's Third Street Promenade and the Irvine Spectrum Center.

The development would offer outdoor activities and sporting events that appeal to the active lifestyle popularized in Southern California, Cavileer said.

"Our project is going to be the anti-Station and the anti-Gaughan," he said, referring to big locals casinos built by Station Casinos and Boyd Gaming Corp.'s Coast Casinos Inc., formerly owned by the Gaughan family.

"Now you can walk in the box (of the casino) or you can take a short walk down at The District at Green Valley Ranch which is over in five minutes," he said. "Here you can visit 45 different restaurants, visit five different hotel-type properties and go to two different casinos."

Cavileer said the Silverton is talking with major hotel, resort and entertainment brands to locate at the site. The companies would likely be involved in owning or operating the venues rather than just licensing their names, he said. Cavileer declined to name the companies.

"There are a lot of brands that have yet to get to Vegas because of the barriers to entry," Cavileer said. "We are approaching them with a concept that is possible because of the amount of land we have available."

The plans mark the latest transformation at the Silverton, which is owned by privately held Majestic Realty Co. of Los Angeles, one of the country's largest private developers of commercial buildings. Majestic Chief Executive Ed Roski is part owner of the Los Angeles Kings and Los Angeles Lakers franchises as well as a part owner of the Staples Center arena.

Majestic opened the Las Vegas property as the Boomtown in 1994, gave up control of the property and then assumed control in 1997, renaming it the Silverton that year. It has evolved from a tired western theme into a more modern look appealing to a wider age group including the coveted youth market from Southern California.

The property in January finished a $150 million expansion that included the 175,000-square-foot Bass Pro Shops sporting goods store, several new restaurants, an 800-seat theater and renovated guest rooms.

A previously announced $75 million expansion including a 300-room hotel tower -- effectively doubling the Silverton's rooms -- will break ground this year along with 30,000 square feet of meeting space and a parking garage.

The second casino and hotel takes its cue from Green Valley Ranch, Station's most profitable and most expensive locals casino.

When Station Casinos recently announced it had made $78 million in operating cash flow at that property last year on a $300 million investment, Cavileer took notice.

"The mere fact that they were able to prove off-Strip that they could get high rates gives me a lot of confidence to do this on I-15 and Blue Diamond, only three miles south of the Strip," he said.

Station's Green Valley Ranch, which recently completed a $125 million hotel and meeting room expansion of its own, in December, reaped a 26 percent return on invested capital last year -- an aggressive number considering that many Strip projects are satisfied with returns of 15 percent to 20 percent.

The influx of visitors and residents into Las Vegas is driving those returns.

Near the Silverton, a surprising number of condominium and timeshare towers are under construction on Las Vegas Boulevard South that weren't on developers' radar screens two years ago, Cavileer said.

Some 6,000 units are under development, with existing and future high-density residences numbering in the 10,000 to 20,000-unit range, he said.

Primarily a locals hangout when it opened in 1994, the Silverton has evolved into more of a tourist-driven property where visitors will drive in from Southern California or even take cabs from the Strip to check out Bass Pro Shops and other offerings, he said.

In the near term, the property will be expanding a casual dining restaurant and a steakhouse as well as upgrading its buffet to Strip standards, Cavileer said.

"We're three minutes from Mandalay Bay and have shuttle buses that can drop people off at the (Mandalay Bay) Convention Center. We're an alternative for Southern Californians."01