Australian casino magnate James Packer is in talks to develop a Las Vegas Strip resort on land once occupied by the New Frontier Hotel & Casino.
The billionaire chairman of Crown Resorts, whose first foray onto gaming’s most famous street ended in disaster when it collided with the 2008 financial crisis, is reported to have bought into a loan backed by the vacant north Strip property and is negotiating a potential deal with other creditors, including Oaktree Capital Group.
The talks are not described as conclusive and could fall through. Mr Packer owns less than 10% of the debt, according to a source cited by Bloomberg.
Representatives of Oaktree and Crown declined comment, the newswire said.
Mr Packer has been interested for some time in bankrolling a return to the Strip, which is recovering from the recession and enjoying record visitation. He was a prospective buyer of The Cosmopolitan, which sold in May to private-equity giant Blackstone Group for US$1.75 billion, and his possible involvement in the 34.5-acre New Frontier site would be the second major investment in the Strip’s neglected north end, which has been garnering attention in the wake of Genting Group’s plans for a $4 billion megaresort at the site of the former Stardust.
“Crown is a great brand and if it’s going to be a major international player in gaming then it really does need to be in Las Vegas in some way, shape or form,” said Matt Williams, head of equities at Australia’s Perpetual Limited.
Mr Packer lost almost $2 billion on two abortive Strip projects when the recession hit. One of them, the Fontainebleau, remains half-finished. He is also reported to have lost money on his investment in regional operator Cannery Casino Resorts.
But he had plenty of company. A consortium led by Israeli developer Elad Group paid $1.2 billion to buy the New Frontier from Phil Ruffin in 2007 and had the aging hotel and casino demolished to make way for a multibillion-dollar resort that never got off the ground, the plans abandoned when the US economy went into free fall the following year and Strip property values plunged. Elad later relinquished the debt-laden site.
Oaktree, the world’s biggest distressed debt investor, now owns more than half of the project’s loan after buying the debt at a discount of as much as 50%, people close to the situation told Bloomberg. Credit Suisse Group helped arrange a $625 million loan tied to the property and sold Oaktree at least a portion of it.
Mr Packer is the biggest shareholder in Crown, which owns Australia’s Crown Melbourne and Crown Perth resorts and 33% of Macau casino giant Melco Crown Entertainment. Melco is developing a Manila megaresort slated to open this fall. Separately, Crown is licensed to develop a luxury hotel and casino in Sydney and is pursuing a possible gaming resort in Sri Lanka.
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