The Wyoming, Pennsylvania-based company announced this morning that local casino operator Penn National Gaming has acquired 19-month-old M Resort for $230.5 million. Penn National said in a statement that it had purchased all $160 million in subordinated debt previously held by MGM Resorts International from Bank of Scotland, an affiliate of Lloyds Banking Group.
Resort M was built by Anthony Manel III and his family at a cost of $1 billion. The price included $300 million on a 93-acre site south of Las Vegas Boulevard and $700 million for construction.”This transaction is a great opportunity for Penn National, M Resorts, customers and employees as we address financial uncertainty and debt burdens that have unduly impacted M Resorts’ operations,” Penn National CEO Peter Kalino said in a statement.
“M Resort is a unique and differentiated property that we expect to see continued improvement in operating performance even without the benefit of a local economic rebound in Las Vegas,” Kalino said. The Review-Journal reported in August that Blackstone Group, a global investment firm, had requested a $700 million debt tender held by the bank. A dozen companies, partnerships or individuals have expressed interest in Resort M, according to gaming sources.
Marnell and his family, including his father, casino construction pioneer Tony Marnell Jr., worked with Los Angeles-based private equity firm Leonard Green & Partners to make one of the debt proposals. The deal was announced before the stock market began trading. However, Wall Street quickly reacted positively to the deal. “While we are currently taking a cautious view of the Las Vegas market, we think the deal makes strategic sense for Penn,” Carlo Santarelli, a gaming analyst at Wells Fargo Securities, said in a note to investors. 에볼루션 바카라사이트
He added that Penn is “buying properties that can yield around 13% cash returns if their operational strategy is implemented, and buying luxury-type properties in the destination market at a small replacement cost.” Penn National operates racetracks and 16 casinos in U.S. cities except Las Vegas and Atlantic City. Last June, Penn National received its Nevada gaming license after acquiring 1 percent of a small Nevada slot machine manufacturer.
The move paved the way for the company to move quickly and buy a resort in Las Vegas. JPMorgan gaming analyst Joe Greff said the deal wasn’t “a big positive” right now because of the depressed Las Vegas market. However, he said Penn had a “good fortune.” “This acquisition enables Penn to enter the Las Vegas market, diversify its portfolio, and provide the local customer database with the assets to visit the Las Vegas market,” Greff said. Carrino said Penn National will leverage its database of 12 million customers to increase visits to its M resort.
Resort M has 390 hotel rooms and 92,000 square feet of casinos. The stunning property has nine restaurants and more than 60,000 square feet of conference and conference space. M Resort’s master plan includes the potential to develop up to 1 million square feet of retail stores and multi-screen digital movie entertainment complexes. The property was financed through equity investments by the Marnell family, loans from the Bank of Scotland and $160 million investments by MGM Resorts.
A year ago, MGM Resorts made a note of its investment in the resort when the casino was only a few months old. Resort M opened at the height of the recession after a year-and-a-half-long construction process. Operators have relied on nearby residential communities and businesses planned to strengthen their customer base. Projects have been suspended or canceled due to the recession. Motivated by massive marketing efforts, M Resort opened its doors to many people. Its heavy business forced M Resort to hire an additional 250 employees to 1,800 employees. With the novelty gone, the business slowed down.