Genting to buy unfinished Las Vegas Echelon Resort from Boyd

Boyd took an impairment charge of about us$ 994 million in the fourth quarter, increasing its adjusted loss more than ninefold from a year earlier.
The project will be rebranded Resorts World Las Vegas, with the opening of phase one planned for 2015, Kuala Lumpur-based Genting said separately. “This is an unparalleled opportunity to showcase what has made the Resorts World brand a globally recognized success for the past several decades,” Chairman and CEO Lim Kok Thay said in a statement.

Genting, which also has interests in plantations and energy, has been pushing into U.S. gambling. The company runs the Resorts World Casino at Aqueduct race track in New York City, the top-grossing U.S. slot machine parlor, and is pursuing one in Miami. The uncompleted Echelon became a symbol of U.S. real estate excesses and Las Vegas’s woes after Boyd stopped construction in August 2008.

The project sits along the northern part of the Las Vegas Strip, near Wynn Resorts’s properties. It will feature more than 3,500 rooms in the first phase, 175,000 square feet of gaming space, luxury dining and retail, Genting said.

Governor’s optimism
“The entrance of one of the world’s leading resort gaming developers into Nevada is another fantastic sign that Las Vegas and the Strip are poised for great things moving forward in 2013 and beyond,” Governor Brian Sandoval said in the statement.

Genting, founded in 1965, has interests in five publicly traded companies with a combined market value of us$ 46 billion. The company purchased the downtown Miami Herald building in Florida in 2011 with the intent of building a casino. Florida’s Legislature has not passed a law permitting one there, however. The company opened its New York casino in October 2011. It generated us$ 638 million in revenue last year, becoming the top slot machine location in the country, according Genting. It also owns one of two casinos in Singapore, and plans to use its name recognition in Asia to attract foreign travelers to Las Vegas.

Boyd began construction on the us$ 4.75 billion resort in 2007 before stopping a year later amid the financial crisis. The company said at the time it incurred us$ 500 million in capitalized expenses and that it would be three to five years before it would be interested in restarting.

Sale proceeds
Boyd said today it will receive about us$ 157 million from the sale after paying a portion of the us$ 350 million in proceeds to fulfil the company’s obligations to LVE Energy Partners, the company said. “The sale of the Echelon site is another important step in the ongoing effort to improve our long-term financial position,” CEO Keith Smith said in the statement. Boyd remains “committed to the Las Vegas market” after determining that building a large project on the Strip “was not consistent with our current strategy.”

Boyd’s adjusted loss widened to us$ 27.7 million in the fourth quarter, excluding the us$ 994 million charge for ditching the Echelon development, from a deficit of us$ 2.9 million a year earlier. The figure also ignores us$ 39.4 million in impairment charges related to excess land holdings and a us$ 17.5 million charge involving a gaming license in Shreveport, Louisiana.

Net loss
The net loss was us$ 899.9 million compared with a loss of about us$ 500,000 in the same period last year.  Revenue gained 3.2 percent to us$ 625.8 million in the fourth quarter, Boyd said, though sales at the Borgata, the company’s 50 percent-owned joint venture in Atlantic City, fell 16 percent on a five-day closure due to superstorm Sandy. Sales also declined at downtown Las Vegas properties and Boyd’s “locals” segment in the Nevada city. Revenue was helped by the Peninsula division, including the Kansas Star Casino.

Genting will face new local competition when it opens Resorts World. Los Angeles-based SBE broke ground last month on the SLS Las Vegas, a us$ 400 million remodeling of the Sahara hotel, expected to open in late 2014 farther up the Strip. Visitors to Las Vegas broke an all-time record of 39.7 million last year, while gambling revenue on the Strip rose 2.3 percent to us$ 6.21 billion, according to data compiled by Bloomberg Industries. Gambling revenue remained below the 2007 high of us$ 6.8 billion.