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Rod Smith

Strip Development: Expansion Already in Wynn Plan

4 May 2004

LAS VEGAS -- Wynn Resorts Monday announced plans for a $198 million expansion of Wynn Las Vegas, just under a year before the $2.4 billion megaresort's planned opening.

Deutsche Bank analyst Marc Falcone called the announcement a positive surprise for Wynn investors.

"This certainly underscores the confidence the banks have in the current project -- allowing (Las Vegas developer Steve Wynn) to move quickly into Phase II -- and it's also a signal of the underlying trends that are so strong in Las Vegas," he said.

Highlights of the expansion include demolition of the remaining structures of the former Desert Inn to prepare for a future Phase II expansion that will include an additional casino, another hotel tower and related amenities on the site, according to a statement from Wynn Resorts.

They $198 million project announced Monday also will include expanded parking facilities for Wynn Las Vegas; an additional showroom; 18 additional fairway villas adjacent to the golf course; and improvements and refinements to the design of Wynn Las Vegas.

Wynn declined to discuss the expansion project further Monday.

The developer has already hinted he may add a second tower at the Wynn Las Vegas resort, and Monday's announcement suggests he is proceeding with Phase II planning to expand the development.

Details about the Phase II project were not made available Monday, but Falcone said it is expected to include 1,300 to 1,400 additional rooms and cost in the neighborhood of $500 million.

The 50-story, 613-foot first phase of Wynn Las Vegas, which is under construction, will have about 2,700 rooms.

The additional showroom, fairway villas, other improvements and refinements to Wynn Las Vegas, and lot acquisition, that were announced Monday will cost about $137 million and will be financed through an equity contribution to Wynn Las Vegas.

The expansion of the parking facilities and the demolition of the remaining Desert Inn structures will be undertaken by a newly formed subsidiary.

That subsidiary borrowed about $143 million, secured by the 20-acre site on which the Desert Inn buildings stand.

The site was formerly owned by another subsidiary, and was recently released from the collateral securing the Wynn Las Vegas credit facility and its 12 percent mortgage notes.

The new subsidiary will retain approximately $61 million of the $143 million loan to finance the expansion of its parking facilities, demolition of the remaining Desert Inn structures, and payment of interest, fees and expenses related to the financing transactions.

The remaining $82 million of loan proceeds will be distributed to Wynn Resorts and used, along with an additional $55 million in available cash, to fund the $137 million equity contribution to Wynn Las Vegas.

Other than the additional showroom, all of the improvements are expected to be completed ahead of the April opening of Wynn Las Vegas.

Strip Development: Expansion Already in Wynn Plan is republished from