Mergers, acquisitions and giant-sized construction projects are changing the Nevada market, with hectic activity in banking and the resort industry setting the pace in 2006. Several large bank holding companies swallowed smaller firms, while resort companies bought, sold, swapped and built properties to consolidate and improve their positions in the lucrative tourism market. The following are some of the largest transactions during the past busy year.
Bank Mergers and Acquisitions
Bank mergers and acquisitions seem to occur in cycles, and 2006 was certainly an “up” year, with four major transactions finalized and another one announced.
Community Bank/Valley Bank $137.4 million
In September, Community Bancorp, the holding company for Community Bank of Nevada, purchased Cactus Commerce Bank (Arizona) for $13.3 million in cash. The next month, it completed its acquisition of Valley Bancorp, the holding company for Valley Bank, in a transaction valued at $137.4 million. Valley Bank was merged into Community Bank, which took over its five branches, located in Las Vegas, Henderson and Pahrump, bringing the total number of Nevada branches to 14. At mid-November, the bank’s assets totaled approximately $1.7 billion, with deposits of $1.4 billion, according to Community Bank President Ed Jamison.
BankWest/Bank of Nevada $74 million
BankWest/Nevada First Bank $108 million
In May, Western Alliance Bancorporation, the holding company for BankWest of Nevada, announced that BankWest had completed its acquisition of two community banks: Nevada First Bank and Bank of Nevada. The new bank, which adopted the name Bank of Nevada, now has 15 offices in the Silver State: eight in Las Vegas and four in Henderson, plus one each in North Las Vegas, Mesquite and Reno. As of November 2006, Bank of Nevada had assets of $2.8 billion and deposits of $2.3 billion.
Northern Nevada Bank/Nevada Security Bank $27.6 million
The Bank Holdings, the holding company for Nevada Security Bank, completed the acquisition of NNB Holdings, Inc., the holding company for Northern Nevada Bank, in November 2006. The transaction, valued at $27.6 million, made Nevada Security Bank the largest local community bank in Northern Nevada, with assets of $610 million and total deposits of $480 million. The bank now has seven branches in Northern Nevada and northern California.
City National Bank/Business Bank of Nevada (proposed) $161 million
City National Corp., a $14.6 billion holding company based in Beverly Hills, Calif., has signed an agreement to buy Business Bank Corp., the holding company for Business Bank of Nevada, for $161 million in cash and stock. Business Bank, founded in 1995, has four branches in Southern Nevada and three in Northern Nevada, in addition to loan production offices in South Lake Tahoe and Scottsdale, Ariz. At September 30, 2006, Business Bank of Nevada had assets of $489.7 million, loans of $380.3 million and deposits of $427.6 million.
The merger, which has been approved unanimously by the boards of directors of both companies, is expected to close by March 2007 if approved by shareholders and regulators. Assuming the deal goes through, the Nevada bank will assume the name City National Bank.
Casino Mergers and Acquisitions: Closed
In May, Harrah’s Entertainment finalized the sale of the Flamingo Laughlin Hotel and Casino and approximately 7.7 acres of land in Atlantic City for a combined total of $170 million. The buyer was American Casino & Entertainment Properties, LLC. The Flamingo Laughlin, the largest resort in the Colorado River town, was renamed Aquarius in October 2006. The 18-acre property contains 1,907 rooms in two 18-story towers, a 57,000-square-foot casino, 35,000 square feet of meeting space and a 3,300-seat amphitheater,
Anthony Marnell III and Sher Gaming, LLC, headed by Ed Sher, partnered to buy the Saddle West Hotel and Casino in Pahrump in June for an undisclosed amount. Also in June, Harrah’s Entertainment completed the sale of the Reno Hilton hotel-casino to Grand Sierra Resort Corp. for approximately $150 million. The hotel is in the process of being converted into the Grand Sierra Resort and Casino (see below).
In October, Boyd Gaming Corp. closed its sale of the South Coast property in Las Vegas to Michael Gaughan in exchange for cash and some of Gaughan’s stock in Boyd Gaming, a transaction valued at about $512 million. The new owner has renamed the property South Pointe and is busy re-branding it. South Pointe includes 1,350 guest rooms, an 80,000-square-foot casino and a 4,400-seat equestrian complex.
Casino Mergers and Acquisitions: Pending
New York developer Bruce Eichner, who is building the $2.4 billion Cosmopolitan project next to the Bellagio (see below), joined forces with D.E. Shaw and Co., a New York-based asset management firm, to put in a takeover bid for the Riviera Holdings Corp., owner of the Riviera Hotel in Las Vegas and the Black Hawk Casino in Colorado. The offer is valued at more than $470 million. The Riviera signed a 30-day exclusive negotiating agreement in mid-November.
Columbia Sussex, a Kentucky-based hospitality company that owns more than 67 hotels and eight casinos, has made a $2.75 billion agreement to buy Aztar Corp. Aztar Corp. owns the Tropicana Resort & Casino on the Las Vegas Strip and the Tropicana Casino Resort in Atlantic City. The takeover bid was approved in November by the Gaming Control Board and is expected to close by the end of 2006.
Loews Hotels recently announced plans to acquire the Hyatt Regency at Lake Las Vegas for an undisclosed amount. The deal is expected to close by the end of 2006. The purchase will be funded by a joint venture, with a single investor putting up 75 percent of the purchase price and Loews Hotels adding the remaining 25 percent. The property will be renamed Loews Lake Las Vegas Resort.
MGM Mirage has agreed to sell its Buffalo Bill’s, Primm Valley and Whiskey Pete’s hotel casinos, collectively known as Primm Valley Resorts, to Herbst Gaming, Inc. for $400 million. The parties anticipate the transaction will close by the end of the first quarter of 2007, following customary regulatory and government approvals. The resorts, located in Primm, about 40 miles south of Las Vegas, feature a total of 2,644 rooms, 136,000 square feet of casino space and the 6,000-seat Star of the Desert Arena.
In further evidence that it is divesting itself of properties in outlying areas, MGM Mirage entered into an agreement in October to sell its Colorado Belle and Edgewater hotel-casinos in Laughlin for $200 million. The buyer is a partnership between Anthony Marnell III and Sher Gaming, LLC. The two properties together feature 2,535 guest rooms and 138,000 square feet of casino space on 57 acres of land along the Colorado River. The transactions should be completed in the second quarter of 2007.
Herbst Gaming, Inc. is entering the Northern Nevada market with its agreement to purchase the Sands Regent which operates four casinos, including the Sands Regency in Reno. The $148 million deal is expected to close before the end of the year.
Boyd Gaming announced in October that it intends to trade the Barbary Coast Hotel and Casino for 24 acres on the Las Vegas Strip, just north of its Echelon Place development. The deal will be a tax-deferred 1031 exchange. The value of the transaction has been placed at approximately $280 million. After the usual regulatory approvals, the deal is expected to close in the first quarter of 2007.
The grand-daddy of all pending deals is a proposed $15.5 billion buyout offer for Harrah’s Entertainment, made by a partnership between Apollo Management and Texas Pacific Group. Harrah’s board is still considering the deal, which was proposed in October, but no decision had been made at press time.
Construction Mega-Projects
Resort companies have been keeping construction companies, crane-rental firms and mapmakers busy over the last few years with a host of big-ticket building projects. The projects are so big, in fact, that we only had room in this article to mention those whose value exceeded $1 billion.
Project CityCenter $7 billion
The largest construction project in Nevada is now underway on the Las Vegas Strip. Project CityCenter, being developed by MGM Mirage, sits on 66 acres between the Bellagio and Monte Carlo. Scheduled for completion in late 2009, the mixed-use project will include 2,800 luxury condominium units, a 4,000-room hotel and casino, two 400-room non-gaming boutique hotels and more than 470,000 square feet of retail, dining and entertainment venues. At a projected cost of $7 billion, it is the largest privately-financed development in the United States. Some of the world’s most high-profile architectural firms have been recruited for the project, which will include high-rise towers, 500,000 square feet of convention space, and even its own power plant.
Echelon Place $4 billion
The Stardust Hotel, a Las Vegas Strip icon constructed in 1958, recently closed its doors to make way for Echelon Place. The 63-acre project under development by the Boyd Group is slated to include four hotels with a total of 5,300 rooms, in addition to a 650,000-square-foot Las Vegas Expo Center, 1 million square feet of convention space, 350,000 square feet of retail and covered parking for 8,000 cars. Echelon Place is scheduled to open in 2010.
Cosmopolitan Resort $2.4 billion
The Cosmopolitan Resort & Casino recently held a “bottoming out” ceremony (in contrast to a “topping-off” ceremony) to herald the completion of the massive excavation project needed to make room for its five-level underground parking garage. A spokesman for the developer, 3700 Associates, LLC, said the group is looking forward to actually going vertical on the project, located on a 8.5-acre site just south of Bellagio. Plans call for two high-rise hotel and condo-hotel towers to include 800 hotel rooms and 2,200 condo-hotel units. Cosmopolitan will also contain a 75,000-square-foot casino, 150,000 square feet of convention and conference space, 300,000 square feet of retail and dining venues and other upscale amenities. A mid-2009 opening is planned.
Conversion of Grand Sierra Resort $1.8 billion
The former Reno Hilton property, located on a 148-acre site just north of Reno-Tahoe International Airport, is undergoing a $1.8 billion conversion to turn it into the Grand Sierra Resort and Convention Center. The conversion plans call for two high-tech, indoor water parks in addition to a 5-acre outdoor amphitheater and park, 10 new restaurants and bars and a four-story golf driving range. The first phase of the project will convert the top 11 stories of the existing 27-story building into 824 condo units. The second phase will feature another tower with 1,200 units, and the planned third phase will include seven more residential towers along the Truckee River, which will contain 2,000 more condo units. Grand Sierra Resort Corp., which purchased the property in June 2006, plans a six-year timeline for completion of the project.
The Palazzo $1.6 billion
The Palazzo Casino Resort is nearing completion on a 15-acre site between the Venetian and Wynn Las Vegas on the Las Vegas Strip. The project consists of a 50-story luxury hotel tower with 3,025 rooms, a 105,000-square-foot casino, an enclosed shopping, dining and entertainment complex measuring 400,000 square feet, and 450,000 square feet of meeting and conference space. Developed by Las Vegas Sands Corp., owner of the Venetian, it is scheduled for completion in the second quarter of 2007.
The Signature at MGM Grand $1.2 billion
The Signature at MGM Grand is a condo hotel built by a partnership between MGM Mirage and Turnberry Associates on the location of MGM Grand’s closed theme park. It will feature three identical 38-story towers, each containing 576 units. The first tower opened in May 2006, the second is scheduled to open December 2006 and the final tower is due to be completed in May 2007.
M Resort (proposed) $1.8 billion
Still on the drawing board is the M Resort, which is planned for the corner of St. Rose Parkway and Las Vegas Boulevard within the Henderson city limits. Anthony Marnell III has already received initial approval from the city for the first phase of the project, which is scheduled to include a 1,500-room hotel tower, a 100,000-square-foot casino and 100,000 square feet of convention facilities. A planned second phase would include a 1,000-room hotel tower and 1,944 condo units, bringing the total square footage of the project to 7.3 million. If approved, construction on the first phase could begin in September.
