Treasure Island has strong interest in buying Caesars properties on the Strip, owner reveals
Treasure Island owner Phil Ruffin is interested in purchasing properties owned by Caesars Entertainmet Corp., the Colorado businessman himself told the Las Vegas Review-Journal last week.
News about Mr. Ruffin’s interest in expanding his company’s portfolio with Caesars hotel and casino resorts arrived as the Las Vegas powerhouse’s largest stockholder, New York activist investor Carl Icahn, is pressing it to sell itself or divest properties.
Mr. Ruffin said that he is particularly interested in buying Caesars properties on the Las Vegas Strip. The company’s Strip catalog includes its flagship resort Caesars Palace as well as Harrah’s and Paris, among others.
Mr. Ruffin revealed that he could pay $1 billion in cash and raise even more in debt for a Caesars property on the Strip, if the gaming and hospitality giant succumbs to pressure from its largest stockholder.
The Treasure Island owner went on to explain that Caesars has some “great locations and [they] would have strong intrerest”
found the right deal.
The Colorado businessman is optimistic that they can borrow up to six times the cash flow of a property they might have intrerest in. He also noted that Strip properties with annual cash flow of between $200 million and $300 million are of primary interest.
A Caesars Strip Property Could Be Valued at at Least $2 Billion
According to SunTrust Robinson Humphrey analyst Barry Jonas, Strip casino resorts should be able to sell for an amount equivalent to at least 10 times their annual cash flow. This means that Mr. Ruffin might have to pay at least $2 billion for a Caesars complex in one of the world’s most popular casino hubs.
The Treasure Island owner, who has a $3 billion net worth, has a history of successful and timely purchases of Las Vegas Strip properties. In 1997, the Colorado real estate developer bought the New Frontier Hotel for approximately $165 million and sold it in 2007 for $1.2 billion. The sale took place a year before the great recession hit Las Vegas (and the rest of the world), causing catastrophic disturbancies in Sin City’s casino and real estate markets.
The timely disposal of the New Frontier Hotel left Mr. Ruffin as one of the few people with cash on the Strip at the time. The businessman was able to purchase Treasure Island from MGM Resorts International in late 2008 for $775 million. The transaction basically saved MGM from bankruptcy.
Mr. Ruffin has not been the only potential Caesars buyer to have expressed interest in the casino behemoth that currently operates more than 50 properties across four continents. It emerged recently that Nevada casino operator Eldorado Resorts has been granted access to Caesars’ financial data and that the company was exploring a reversed takeover of its larger counterpart.
Texas billionaire and owner of the Golden Nugget chain of casinos Tilman Fertitta has, too, shown interest in Caesars. The businessman approached the casino powerhouse last fall but his offer was rejected.
