Question of the Day - 16 August 2020

[Editor's Note: This QoD is the work of David McKee, LVA's Stiffs & Georges blogger.]

A would-be second Ferris wheel in a city that can barely support one, Skyvue was the victim of the laws of supply and demand … and developer Howard Bulloch’s inability to capitalize it. On January 30, a bankruptcy court announced that the six lots on which it sits—at the intersection of Hacienda Avenue and Las Vegas Boulevard South—would be auctioned, a process that took place June 5. Keen-Summit Capital Partners handled the sale, which—remarkably enough—began with no asking price on the property. “There is nothing like this available for development on the Strip. The heart of the Strip between the Wynn property and Mandalay Bay is fully developed. This opportunity is the last true development opportunity in the heart of the Strip” said Keen-Summit’s Matthew Bordwin.

Skyvue had been idle for eight years, its sale forced by a $13 million bankruptcy petition in 2018. Bulloch and business partner David Gaffin countered with a $416 million sale plan to Atelier Real Estate Partners, who aspired to build a resort hotel on the site. However, whether or not flattening tourist demand for Las Vegas had anything to do with it, the deal evaporated, leaving Bulloch holding a very expensive bag. According to CasinoReview.com, “the [38.5-acre] package includes apartments and a series of vacant plots, and is offered as a whole or in pieces.”

Colliers International said the bidding process drew a “fairly healthy response,” with 271 parties signing nondisclosure agreements with the court. However, interest seemed to wither as the auction date neared. Certainly nobody wanted to put much cash on the barrelhead for the land, Strip-facing though it was. 

Entrepreneur Wayne Perry got the key 20 acres for a $75 million "credit bid," which means the purchase is secured by money that Bulloch owes Perry. If the latter can’t collect, it’s either pony up some long green or risk losing the land. Still, at less than $4 million an acre, it can’t be argued that Perry didn’t get a bargain. His intentions for the site are a mystery. “We’re all curious,” Colliers International broker Mike Mixer told the Las Vegas Review-Journal and that’s something of an understatement.

Mixer added that, early in the auction process, some would-be bidders wanted the whole 38.5 acre parcel, with “grandiose” plans for casino megaresorts dancing in their eyes. COVID-19 and the recession put an end to that. Enter Perry and his conditional $75 million. With Perry only interested in a (substantial) fraction of the Skyvue site, that brought a few other players into the mix.

One of them is The Three Affiliated Tribes of the Fort Berthold Indian Reservation, which landed, for $12 million, nine acres between East Ali Baba Lane, Giles Street and East Mandalay Bay Road. It sits immediately south of the Roman Catholic Shrine of the Most Holy Redeemer and east of MGM Resort International’s festival grounds/overflow parking.

The Desert Oasis Apartments went to  ED-Den Investment Co., whose owner, Edward Kim, paid $15.6 million for seven acres of dubious value. The apartments have a “tremendous amount of deferred maintenance” but Kim will be “spending a ton of money” to remediate that, according to his broker, Alberto “AJ” Jauregui.

As for the Fort Berthold tribes, they occupy 998,000 acres in North Dakota, divided between the Mandan, Hidatsa and Arikara tribes. Since 1993 the tribes have operated the Four Bears Casino & Lodge. It would appear that the Three Affiliated Tribes have beaten the Seminole Tribe—owners of Hard Rock International—in becoming the first Native American band to (almost) own a piece of the Strip. However, don’t expect a Vegas version of Four Bears: The tribe says its interest in the land is basically speculative, calling the deal “an investment … plain and simple.”

According to News 3 Las Vegas, “All of the land is in a qualified opportunity zone and can be developed as gaming, hotels, retail, restaurants, entertainment, resort amenities, parking, among other things.” So the ball in mainly in Perry’s court. Will be build where Bulloch failed? On the other hand, we hear the nearby Las Vegas Raiders could use some overflow parking …