New Yorkers Not Shy About Investing Big in Las Vegas Real Estate
October 5, 2019
When Caesars Entertainment Corp. said last month that it is selling the Rio for more than a half-billion dollars, it ended years of rumors that the off-Strip resort was being shopped around.
It also marked another nine-figure Las Vegas real estate deal with a New York buyer.
Caesars said Sept. 23 that it had agreed to sell the Rio to Imperial Companies for $516.3 million. The deal is expected to close this quarter. Under the terms, Caesars would keep operating the 2,520-room hotel-casino for at least two years and pay $45 million in annual rent.
Imperial is buying a resort that opened in 1990 and, as original developer Tony Marnell previously told the Las Vegas Review-Journal, “needs a little TLC” but “hasn’t gotten a dime’s worth.”
Las Vegas has long attracted out-of-state investors, New Yorkers among them. Lehman Brothers, for instance, wrote loans for condo projects, hotel purchases and other real estate deals here during the mid-2000s bubble, before the firm’s collapse helped trigger the U.S. financial crisis.
And while New Yorkers aren’t the only ones to spend hundreds of millions on Las Vegas real estate in recent years, they account for several deals.
The biggest buyer is The Blackstone Group. Led by billionaire Stephen Schwarzman, the investment powerhouse acquired the Hughes Center office park for $347 million in 2013, the Cosmopolitan of Las Vegas for more than $1.7 billion in 2014 and downtown’s 5.4 million-square-foot World Market Center furniture showroom hall for an undisclosed sum in 2017.
Blackstone also has shelled out hundreds of millions of dollars for apartment buildings in the valley over the past few years.
Developer Steve Witkoff, who was born in the Bronx, teamed with Miami partners to acquire the unfinished Fontainebleau for $600 million in 2017.
They bought the mothballed north Strip hotel, now called Drew Las Vegas, from billionaire Carl Icahn, himself a New Yorker, who purchased the blue-tinted high-rise out of bankruptcy in 2010 for around $150 million.
The Nakash family, whose Jordache Enterprises conglomerate includes clothing, agriculture and aviation investments, teamed with Gindi Capital to buy Showcase Mall in phases in 2014 and 2015 for more than $367 million.
Gindi, meanwhile, acquired 9.5 acres along Las Vegas Boulevard near Showcase for $172 million this year. It bought the spread from New York investment firm Spectrum Group Management, which had acquired it out of bankruptcy during the recession.
This tally doesn’t cover every large deal involving New York investors since the market crashed, and they don’t just buy and hold. World Market Center and Showcase Mall are expanding. Gindi said it’s planning a “flagship” retail and entertainment project at its newly acquired property, and Witkoff plans to finish the long-stalled former Fontainebleau.
Caesars, which Reno’s Eldorado Resorts is buying for $17 billion, said in its announcement last month that the Imperial transaction “is not expected to result in any changes to the guest experience” at the Rio.
A spruce-up, however, would likely be welcome news.
The Review-Journal reported in May, the month before the Eldorado deal was announced, that by the end of 2020, Caesars was on pace to have spent more than $600 million since 2014 to upgrade its Las Vegas hotel rooms.
The Rio was left out.