While glitzy resorts up the Strip feature fast cars and high-stakes games, the used and slightly dented Geo Metro displayed in front of Vacation Village epitomizes the casino’s downscale appeal. Whether investor Shawn Scott can turn around the bankrupt property may be one of the more interesting bets to watch.
Scott, head of Capital One LLC, grabbed Vacation Village with a $17.8 million bid at auction last week. It was a bargain basement price for the 315-room hotel-casino sitting on 25 acres bounded by Las Vegas Boulevard, I-15 and the I-215 beltway.
Bidders, including the Wells Fargo subsidiary that is the property’s chief creditor, were skittish because the debt-ridden resort also lies in the shadow of McCarran International Airport’s runways. With jets roaring just a few hundred feet over the casino, the county has restricted any future expansion plans to just three stories.
Nevertheless, analysts say Vacation Village Scott may have landed a sweet deal. Kevin Higgins of CB Richard Ellis’ gaming group estimated the property at a $22 million value. A few miles to the south, Coast Casinos shelled out $50 million for an unimproved 50-acre parcel at Las Vegas Boulevard and Silverado Ranch.
But the current economic slowdown has turned bulls into bears. Developers ranging from Bob Stupak to Howard Bulloch to the Howard Hughes Corp., which owns a comparable tract just to the north, were glimpsed in the auction crowd ”” but none expressed any interest in bidding.
“What once had pink eye now has a black eye,’’ Higgins said of the property. “There’s been a decline in value because everything took a hit (after Sept. 11).’’
Scott, however, is undaunted. He recently purchased another struggling hotel-casino, the Flamingo Reno, from Park Place Entertainment. And he pledges to “make every effort” to keep Vacation Village open while developing a long-term plan for the property.
On Monday, he submitted a $3.6 million check for a required down payment on the Western-themed Las Vegas property. Escrow is expected to close in 30 days.
His acquisitions have prompted some industry analysts to wonder whether Scott is a white knight determined to revive ailing resorts ”” or a vulture capitalist looking to pick apart the remaining assets.
Scott was not available to comment on his vision for Vacation Village, but creditors have rushed in to recoup some of their losses. International Game Technology, Community Bank of Nevada, Anchor Gaming and Atronic Casino Technology snapped up more than 400 slot machines and other gaming equipment at the casino.
Secured creditors are owed more than $24 million in all. Some 157 unsecured creditors are owed another $850,000. Vacation Village, owned by the Heers family, filed for Chapter 11 bankruptcy protection after Wells Fargo subsidiary Foothill Capital sued for $19.4 million plus interest.
Meantime, another deal involving Scott hit a snag in Louisiana last week when a judge delayed approval of a slot license for the Boyd Gaming Group. Boyd had agreed to purchase Scott’s Delta Downs racetrack for $125 million and applied to install 1,700 slot machines there. Scott, who had not been cleared for a license, had bought the 200-acre property for $10 million in 1999.