A Wall Street Journal story from yesterday evening reports that Pinnacle Entertainment has found a buyer for its 19 acres of Boardwalk land. These were cobbled together at huge cost — $270 million or $14 million an acre — by former CEO Dan Lee (left). His successor, Anthony Sanfilippo, is reportedly flipping them for approximately $35 million. That’s $1.8 million/acre and a $235 million writeoff by Pinnacle, just as it’s sprucing up its balance sheet in order to acquire Ameristar Casinos. One realtor told the WSJ, “if the market turns, somebody can come in and build a casino lickety-split.” In your dreams, bub. Hard Rock International has a site but reportedly can’t raise money amid post-Revel malaise. Anybody “can come in” and peel off an asset like Trump Plaza for relative peanuts. And nobody ever “[built] a casino lickety-split” that was worth a damn. Of course, if Lee had not precipitously demolished Carl Icahn‘s former Sands Hotel & Casino, this might be a more upbeat story — and Pinnacle would be amortizing its investment, at least to some small degree. Better luck with this Ameristar thing, guys … and I mean that sincerely.
Roach hotel. In researching a “Question of the Day,” I discovered that the Golden Nugget‘s downtown Las Vegas roach problem was a “multi-generational” affair. The Southern Nevada Health Department began fielding complaints from employees back in ’08 but didn’t catch the repulsive little critters until 2012, by which time the roaches had become quite thoroughly entrenched in one corner of the property. (But had not spread further, thank God.) It sounds very much like owner Tilman Fertitta began cutting corners on maintenance in 2008, as many in the industry were doing. And the next time you hear some industry muckety-muck complain of “excessive regulation and red tape,” here’s what ‘excessive regulation’ in action looks like. So, how’s your appetite?
I saw the story on the A.C. land as well. I told PNK they could expect $20 something million (about a year ago), which was in-line with what other realtors thought. In that sense, they actually got a good price for a piece of property that is an expense on anyone’s budget. At least that drag on their balance sheet is gone (it was mostly written down in past quarters anyway).
Thanks, Guru. Yeah, the sale price isn’t what’s bad. (It’s actually better than I expected.) It’s how much money Dan Lee blew agglomerating all that real estate, making a number of local enemies in the process.
Oh yeah. I totally agree. He really shit the bed in AC!