Ruffin: Frontier sale
set for $40M/acre

Mar 27, 2007 5:45 AM

The owner of the New Frontier Phil Ruffin said last week that he is close to selling the 34-acre hotel and casino on the Las Vegas Strip to Elad Properties for about $40 million an acre.

"The contract has not been signed, but if everything goes OK, the deal could be signed in a couple of weeks," Ruffin told Reuters.

Ruffin said he paid $165 million for 41 acres in 1998, or about $4 million per acre.

Seven acres of the site have since been used to develop two condominium towers in a partnership with Donald Trump, the second of which will be unveiled next month. They aren’t part of the sale.

New York-based Elad is best known for its purchase in 2004 of New York’s Plaza Hotel for $675 million. Lloyd Kaplan, a spokesman for Elad, declined to comment on whether the company is in talks to acquire the New Frontier.

Ruffin announced a year ago plans to build an upscale Swiss-themed resort to replace the aging New Frontier but said on Tuesday that a combination of rising construction costs, an attractive 15-percent federal tax on capital gains and other factors have led to a decision to sell.

Bill Lerner, an analyst at Deutsche Bank, said in a research note that a deal at $39 million to $43 million an acre would represent about double the price of recent Strip transactions.

He said "such a transaction could have a profound impact on valuations of Las Vegas Strip operators with significant land holdings, including operators with large contiguous undeveloped parcels like Boyd Gaming and Wynn."

Wynn Las Vegas sits across from New Frontier.

Boyd two weeks ago demolished the Stardust resort, located just north of the New Frontier, to make way for a $4.4 billion, 63-acre Echelon Place development.

Owners of the Moroccan-themed Sahara Hotel & Casino said earlier this month the property would be sold to a private investor group for an undisclosed sum.

Farther south on the Strip, Harrah’s Entertainment bought the Imperial Palace for about $20 million an acre in 2005 and last year spent millions to acquire land adjacent to Echelon in order to swap it for Boyd’s Barbary Coast casino, located between two Harrah’s properties, the Flamingo and Bally’s.

A year ago, Aztar Corp., whose casinos included the Strip’s Tropicana, stopped a bidding war by accepting a $1.9 billion takeover offer from hotel and casino operator Columbia Sussex Corp. Some Wall Street analysts put the price for the flagship property at $30 million an acre.

Analysts also say two companies already in the casino business, unsuccessful Aztar suitors Pinnacle Entertainment and Ameristar Casinos, still want to enter the Las Vegas market.