As my colleague Robin Leach correctly predicted last night, MGM Mirage announced this morning it is selling the Treasure Island for $775 million to reclusive aging billionaire Phil Ruffin. I can't find how many acres the TI sits on -- this and several other sites say 100 acres. If that's so, that's $7.75 million an acre for the land alone, a heckuva deal seeing how there's a decent business standing on it at the moment, too. Ruffin himself set the record by getting $35 million an acre out of the Elad suckers for the Frontier property about 20 months ago. So is $7.75 million the new watermark?This is actually pretty good news for the mid-ranged property inasmuch as Ruffin got high marks for bringing peace and stability to the disastrous New Frontier in 1999, at least before he flipped it. It was razed, of course, to make way for a whole lotta nothing.
Wall Street was happy with MGM, rewarding the debt-larded behemoth with a 18 percent surge in stock price at the opening and its highest price in a month. You can read the press release here. I especially love Ruffin talking about the TI as being in "pristine condition," as if he were buying a rare coin.
The TI's employees probably can heave a sigh of relief not felt in the rest of the MGM Mirage universe, where just last week the Bellagio let go all part-timers at the front desk for the rest of the year. That is, until Ruffin flips the place. Which he's bound to do. But until then, the TI is the crown jewel in his collection of Marriotts. How fun for him.
On the downside, the TI is a resort that is easily forgotten and benefits greatly from its crossmarketing angle with the other MGM Mirage properties. It's unclear how it'll do without that network. In fact, Steve Wynn all but acknowledged to me at one point that the place was the bastard child of his creations, the one he did in a hurry with a lesser budget.
No word on the implosion date, but it's said Mystere will continue to play twice a night on the site even after the rest of the place has been demolished.So, folks...what's next? Is it tasteless to talk about Monte Carlo in the context of a fire sale?
9 comments:
re: Monte Carlo. Not sure if they would want someone else to own the property so close to the new crown jewel
THE Treasure Island? Kind of like people who say "the Wynn" (I admit to doing that.)
I'd say what's next is either the MGM Grand or Mandalay Bay. Obviously, due to Kerkorian's contracts if the Grand is sold then the name isn't necessarily coming along for the ride, though they've been willing to lease it to other operators.
If Kerkorian was protective of his studio name, I'd suggest the company sell the place and then put some heavy renovations/re-theming in Mandalay (a very similar property) and then re-name Mandalay to MGM Grand. But we know that he's not, and Big Green sits on the wrong side of the Strip from what they're focusing on.
Doubtful on MGM Grand. Maybe Circus Circus? Didn't Feldman say C-C is one of the biggest losers? But they own it free and clear. If someone implodes it and puts up something better, that's a much better "gateway" to CityCenterII, if that ever happens, to the north there.
The Mirage and Treasure Island are bundled together, for tax-assessment purposes, as one 84-acre parcel (plus another 14 acres of parking back on Industrial). Even with those addt'l acres, The Mirage occupies much the larger half of the two parcels combined. So I'd hazard that Ruffin paid, at a generous estimate, around $19 million/acre -- less than half the rate Elad Properties paid him for the ex-New Frontier.
David McKee
Dave: Maybe so, but the New Frontier was sold simply for the land. The TI was sold with a profitable, operating business that's not going anywhere right now. So it's Apple-to-Apples to compare the prices and acreage, but the since Ruffin's buying the hotel, too, he's getting a helluva deal. You sure couldn't build something like the TI for less than $1b.
MGM says the exact acreage of the transaction hasn't been settled upon yet. Jake Fuller, of Thos. Wesel Partners has placed an approx. $15 million/acre valuation on the deal, for whatever that's worth, but --as you note -- it's a rough measure, however you slice it.
DMc
Interesting... Just as vegas seemed to be all combining into one or two merged casinos, it's fracturing again. That's a good thing for the consumer, surely, as they fight harder for our dollars.
I like the TI... Wynn may say it was done on the cheap, but it still feels as welcoming as most properties Wynn has had a hand in, which is no bad thing.
Not stayed there though, but would happily play poker and craps there all day.
MGM Mirage is loosing its best buffet with the T.I.
Phil got himself a great deal. Elad overpaid for raw land. Phil got a casino with good location that has been reworked and probably can generate some profits over time. I would not be surprised to see him take on mirage. MGM is kaputnick. They would not be selling at a market bottom if they did not really need the money. That City Center is a money pit.-and the biggest bust in history.
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