The north end of the Las Vegas Strip may be getting a new resident long before anyone expected. Boyd Gaming Corporation (NYSE:BYD) has sold its Echelon project to Genting Group, a Malaysian company with a web of gaming, hospitality, and real estate holdings worldwide. The company paid $350 million for the 87-acre site, the former home of the Stardust hotel.
This ends Boyd’s attempt to make a splash in Las Vegas, down the street from Wynn Resorts, Limited (NASDAQ:WYNN) and Las Vegas Sands Corp (NYSE:LVS) , the two resorts that brought the north end of The Strip to a new level. Boyd Gaming Corporation (NYSE:BYD) had planned a $4.8 billion resort with 5,000 rooms, a 140,000-square-foot casino, and another 300,000 square feet of shopping. But now Genting will take its shot in Las Vegas.
What the new neighbor will look like
Genting’s resort will be branded similarly to Resorts World Sentosa, one of just two casino resorts in Singapore along with Las Vegas Sands Corp. (NYSE:LVS) Sands’ Marina Bay Sands. The company says the resort will be called Resorts World Las Vegas, and phase 1 will include 3,500 rooms, 210,000 square feet of dining, and a 175,000-square-foot casino among the 8 million square feet. The cost will be a minimum of $2 billion but could be $7 billion by the time the entire project is complete.
This is the most ambitious project in Las Vegas since MGM Resorts International (NYSE:MGM) built CityCenter at the bottom of the financial crisis. CityCenter and Cosmopolitan have been financial disasters, and Genting is taking a big risk in the new resort. The good news is, it’s getting a great deal on the property.
A steal for Genting
Genting already opened a casino in New York in 2011 and has been trying to get into the U.S. gaming market in Miami as well. But Las Vegas Sands Corp. (NYSE:LVS) is still the country’s largest gaming market, and for just over $4 million an acre the company is getting a steep discount to Strip sales before the financial crisis. El-Ad Properties bought the New Frontier and the 34.5 acres it sat on for $1.2 billion in 2007, a whopping $33 million per acre. It even appears as if the company will use the abandoned construction Boyd Gaming Corporation (NYSE:BYD) left behind in its new resort, saving even more money.
What it means for Las Vegas
The good news for other casino operators is that Las Vegas will have a new resort sometime around 2016. This will revitalize interest in the city and bring more foot traffic to the north end of The Strip.
The bad news is that it will add more hotel rooms, gaming, and slot capacity to an area that could only fill 84% of rooms last year and already has enough gambling areas.