Sees Shift In Property Ownership &
Published February 4, 2020
Why are we seeing a lot of activity in the disposition of assets in the resort corridor? What shifts are happening in the resort and gaming industry?
There are two factors currently at play. First of all, the publicly traded gaming companies aren’t getting proper valuations from shareholders for their real estate, therefore, they are looking to monetize those assets. This involves sale-leasebacks with REITS and other investors, whereby they are selling the real estate assets and then operating the properties for the new owners. The second factor involves the refocusing of strategic objectives by companies in the gaming space. In doing so, they are selling non-core assets, such as Caesar’s Entertainment did with the sale of the Rio. They did so because they made a decision to focus their efforts on their Strip properties.
Caesars Palace is among several Strip properties that have seen a change in ownership over the past year.
"We may start to see other non-gaming REITs enter into the market over the next couple of years..."
MGM Resorts International is placing their strategic focus on being an operator, as opposed to a real estate owner.
What are some other examples of strategic shifts across the industry?
MGM has decided to focus on being an operating company, as opposed to a real estate owner. We may see more gaming companies following that path. It’s a similar move to what we saw years ago in the hotel industry, with companies such as Marriott, Hilton and Hyatt, all of whom sold off their real estate assets and focused on being operators and franchisors of their respective brands.
"These investors want to be owners, but not operators, of gaming properties and see the Las Vegas Strip as a safe investment to place their capital."
Who are the investors that are moving into this space?
REITS, such as the one recently formed by Blackstone Group, are among the investors that are fairly new to the gaming industry. These investors want to be owners, but not operators, of gaming properties and see the Las Vegas Strip as a safe investment to place their capital. Blackstone’s entry into the market has piqued interest by other institutional investors. We may start to see other non-gaming REITs enter into the market over the next couple of years as a result of this.
New York-based investment firm Blackstone Group has been very active in the Las Vegas property market.
"In the next few years, the north end of the Strip is going to be completely different, with the opening of Resorts World, The Drew, and the Convention Center expansion."
What will Strip resort ownership look like in the coming years, and what impact is expected on the resort corridor?
We’ll certainly see new players in the market. We already see two newcomers with Genting Group and their Resorts World project, as well as Witkoff Group’s Foutainebleau development, which has been renamed The Drew. I do think the general makeup of Strip ownership will remain the same, with traditional gaming companies owning most of the properties, some one-off developers coming into the space, and possibly another Asian-based gaming company coming into the fray.
Malaysia-based Genting Group is set to open up Resorts World
in the summer of 2021.
Are you hearing of similar owner shifts happening in other resort and casino epicenters?
Not really. We’ve seen some turnover in the Atlantic City market over the last ten years, but that’s the only semi-comparable market to Las Vegas.
Will we possibly start to see areas such as the north end of the Strip become more popular among investors looking to develop new projects?
In the next few years, the north end of the Strip is going to be completely different, with the opening of Resorts World, The Drew, and the Convention Center expansion. We’ll also find out soon enough what Phil Ruffin’s plans are for the Circus Circus. I would definitely keep an eye on the north end of the Strip, as it will be an epicenter of activity in the near future.
The north end of the Las Vegas Strip will start to see quite a bit of development activity over the next few years.
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