MGM Mirage sells Treasure Island Las Vegas hotel to Phil Ruffin for $775 million. Ruffin, is the previous owner from Kansas, of the New Frontier hotel, across from the soon to open Encore Las Vegas. He’s decided that there is no better time to invest in Vegas.
The New Frontier Strip hotel was sold for $1.24 billion in May 2007 to the Elad Group. Imploded in Nov 2007 to a lot of fanfare.
As you can imagine the real estate news has some disbelievers in the current economic condition and credit market problems. Banks have tightened their lending and many large gaming operators in Las Vegas has either halted or stopped their hotel expansion or new resorts including Crown Las Vegas, Echelon, Plaza Las Vegas and Trump International Tower Las Vegas.
The New Frontier real estate deal was purchased in ’98 for $167 million.
MGM Mirage will increase their liquidity and create stakeholders’ value with the completion of the TI hotel sale. They are also coordinating financing for their skyrocketing budget of the $11 billion Project CityCenter on the Strip. Within the past year their stock has been deeply discounted to a recent value of $11.42/share.
In 2008, MGM Mirage purchased TI when they acquired Mirage Resorts for $6.4 billion. Steve Wynn built the resort 15 years ago for $450 million.
The financial details for the commercial real estate purchase is $275 million in secured notes and $500 million in cash. Treasure Island deal closing is expected by the end of June 2009 with MGM. Source: LV RJ
MGM Mirage sells Treasure Island Las Vegas Strip hotel to Phil Ruffin for $775 million.