IP gets a reprieve

[*TT*]

[ QUOTE ]
Harrah's will never sell those properties. And if they did, they will 100% remove any TR functionality. Anyone buying the property will be lucky to even be left with a database, but in this case it's moot. They aren't selling anything in Vegas unless it's the Rio.

[/ QUOTE ]

Clark - there seems to be two camps at this stage, those who believe all strip facing properties will be sold off for the value of the realestate is greater than the value of the properties, and the camps that believe that Harrah's will maintain the strip properties.

I have also read an article postulating that the #1 asset of Harrah's besides the realestate was the Total rewards program, that there is value in licensing this out to third party operators.

Is it fair to say you think those who are postulating the strip properties will be sold off are probably wrong? Your record has been pretty good so far, I'm interested to hear what you think.

PS: Both sides are buzzing that the Rio will be sold, and often this buzz comes with the WSOP.

[Poshua]

[ QUOTE ]
Clark - there seems to be two camps at this stage, those who believe all strip facing properties will be sold off for the value of the realestate is greater than the value of the properties, and the camps that believe that Harrah's will maintain the strip properties.

[/ QUOTE ]

Wouldn't a third possibility be for Harrah's to retain the IP site, tear it down and redevelop it as a new resort? Or is there a reason that's not a viable option?

[rafiki]

someone told me the reason they haven't torn down the IP yet is because of some sensitive sewer structures underneath it. Any truth to that ?

[*TT*]

[ QUOTE ]
[ QUOTE ]
Clark - there seems to be two camps at this stage, those who believe all strip facing properties will be sold off for the value of the realestate is greater than the value of the properties, and the camps that believe that Harrah's will maintain the strip properties.

[/ QUOTE ]

Wouldn't a third possibility be for Harrah's to retain the IP site, tear it down and redevelop it as a new resort? Or is there a reason that's not a viable option?

[/ QUOTE ]

I considered this as part of maintaining the strip properties.

[Cactus Jack]

I, too, am waiting to hear what Clark has to say.

I understand that the TR program was highly valued in the Harrahs deal, almost as much as the land value. With everything on the Strip heading off into the ionosphere--as opposed to the Stratosphere--the Harrahs mid-priced properties must be really profitable and have the market sewn up, in case of a business downturn with regard to the luxury houses going up. I wonder how long it will be before we hear of a redevelopment plan, if any?

IP sits right in the middle of the drainage system. When it rains heavily, the water runs right down the driveway. Maybe this is why IP is thought of as the bottom of the barrel.

I love the IP. It gives me the opportunity to run over lots of tourists getting into the front.

[Maura]

and the world's worst buffet

[bav]

I suspect without the buyout, Harrah's would already have announced some grand scheme for what was happening between Flamingo and Harrah's on the strip. Seems like getting Barbary was the last major piece they needed to put together to launch their own $5 to $10 billion monstrosity.

The buyout totally changes things. New owners. New plans. Revisit everything before you do anything. So I assume this is just a reprieve--an admission that they aren't in a hurry to make huge changes so it's better to go ahead and bring IP more fully into the Harrah's fold.

[BBMW]

Yeah, they're very loaded down with debt now. A sell of would quickly clean up their balance sheet quite a bit. I think it's fairly likely because of the HUGE numbers stripfront real estate has been getting (something like $30 million and acre), and the fact that the newly privatized Harrah's doesn't have the capacity to redevelope the site any time in the near future.

[WayAbvPar]

[ QUOTE ]
and the world's worst buffet

[/ QUOTE ]

[ QUOTE ]
someone told me the reason they haven't torn down the IP yet is because of some sensitive sewer structures underneath it.

[/ QUOTE ]

Methinks these items are related.


I love the IP for what it is to me- an air-conditioned refuge where I stop for a beverage and a few hands of BJ or one of the myriad Texas Hold Em table games while navigating the east side of the strip. It is never a destination, but I seem to end of there every trip at least a couple of times.

[Clarkmeister]

[ QUOTE ]
[ QUOTE ]
Harrah's will never sell those properties. And if they did, they will 100% remove any TR functionality. Anyone buying the property will be lucky to even be left with a database, but in this case it's moot. They aren't selling anything in Vegas unless it's the Rio.

[/ QUOTE ]

Clark - there seems to be two camps at this stage, those who believe all strip facing properties will be sold off for the value of the realestate is greater than the value of the properties, and the camps that believe that Harrah's will maintain the strip properties.

I have also read an article postulating that the #1 asset of Harrah's besides the realestate was the Total rewards program, that there is value in licensing this out to third party operators.

Is it fair to say you think those who are postulating the strip properties will be sold off are probably wrong? Your record has been pretty good so far, I'm interested to hear what you think.

PS: Both sides are buzzing that the Rio will be sold, and often this buzz comes with the WSOP.

[/ QUOTE ]

Assuming that the new owners don't radically change course, I think they will take a wait-and-see approach to the center strip, observe how the Vegas market reacts to the current wave of capacity that is coming, then make a decision from there. They are cash flowing plenty, and there's no rush. It's the obvious and prudent move.

TR is way too much a core part of their competitive advantage. Smaller operaters won't be able to afford it, and I just can't see why they would sell it to any of their direct Vegas competition. I mean, who is their market? I just see zero chance of this. It's a big part of the value of the company, absolutely, but more as a huge part of their edge as opposed to something they could/should monetize.

The Rio will ultimately go is my guess, but given the multiple that was paid for the company and the undeveloped land on the site, it's not like it'll be a fire sale. They'll want at least the same multiple as their implied purchase price plus some sort of absurd per/acre price for their 25 or so undeveloped acres on the site. That's just a big price and it'll likely take some time to find a buyer.