The recent sale of the Rio All-Suite Hotel and Casino by Caesars Entertainment to a company controlled by a principal of Imperial Companies could spike a flurry of activity in Las Vegas, believe analysts of investment bank Union Gaming.
A number of transactions of note have cropped up in recent times, with Union Gaming stressing that it’s just the beginning due a perceived undervaluing of Las Vegas Strip assets in the public markets.
Prophesying no end of prospective suitors for strip properties, a number of recent examples have emanated, not least the multi-billion dollar merger between Caesars and Eldorado Resorts.
Further activity has seen Virgin acquire the Hard Rock Hotel and Casino Las Vegas and Mandarin Oriental sold to private investors, with rumours continuing to swirl regarding MGM Resorts looking to offload some of its assets, notably the Bellagio, MGM Grand real estate, and Circus Circus.
John DeCree, analyst at Union Gaming, explained to Inside Asian Gaming: “Currently, MGM is rumoured to be shopping its remaining Las Vegas assets, including the Bellagio and MGM Grand real estate, and Circus Circus.
“Eldorado Resorts CEO Tom Reeg indicated on an investor call in June that the company would look to sell one or two Las Vegas Strip assets following its merger with Caesars Entertainment. Last but not least, the Cosmopolitan has reportedly been for sale by Blackstone, for the right price of course.
“In spite of the uptick in recent M&A activity over the past two years, there still could be up to four or five more potential Las Vegas asset sales within the next 12 months.
“As it stands today, the spread between public casino company trading multiples and the underlying value of Las Vegas Strip casino resort real estate is a favourable arbitrage opportunity, one that MGM and Eldorado/Caesars could hope to exploit in the coming months.”
Caesars’ $516.3m sale of Rio earlier in the week sees the firm retain hosting right of the World Series of Poker, after it descends on the property once more in 2020.