Question of the Day - 09 August 2022

Wynn Resorts owns the land.

We can guesstimate about the value. Wynn acquired the 34 acres in 2017 for $336 million after two abortive projects on the site under different owners (the Strip Plaza and Alon) fizzled. That’s $9.9 million an acre. Obviously, the value of the site has appreciated enormously; there’s a finite amount of gambling-entitled Strip space and they’re not making any more.

We can use what Tilman Fertitta paid recently for 6.2 acres of real estate at the southeast corner of Las Vegas Boulevard and Harmon Avenue as a comparison. Fertitta shelled out $270 million, amounting to more than $43 million an acre. Judging by them apples, even if you average out Wynn's outlay at Fertitta's spend, at $26.5 million per (though it's probably worth more currently), Wynn Resorts is sitting on $900 million worth of Strip gold.  

And that's before Wynn might put it up for sale, though as far as we know, there hasn't been any chatter about shopping the site. If the company did place it on the market, the bidding could get exceptionally heated. Consider that El-Ad Properties paid $1.2 billion ($35 million an acre) for that property in 2007. Of course, that was just before the Great Recession and El-Ad took a monumental bath on the scrubland. But in today's overheated real estate market, a valuation that high, or higher, isn't out of the question. 

As for development by Wynn itself, that’s certainly not off the table. But with Resorts World entering its second year of operation and Fontainebleau expected to open next year, Wynn is probably keeping its powder dry until the extent of the north Strip revival is clear. The company has no history of acting impulsively.

Meanwhile, the site isn’t going anywhere and, as we mentioned, will surely continue to appreciate in value. It’s a highly valuable chip that Wynn can play when and if it needs to.