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Another day another mega-resort begun on the Vegas Strip. Just yesterday, Boyd Gaming broke ground on a $4.8 billion project called Echelon. That’s it on the right. Today comes news that MGM Mirage and Kerzner International are building a new resort on the corner of Las Vegas Blvd. and Sahara. A name and price haven’t been revealed, but Deutsche Bank analyst Bill Lerner noted that the 40 acres that MGM is contributing to the deal were valued at $20 million an acre or $800 million.
Land values have escalated so much Boyd was under pressure from some investors to just sell its 87 acre parcel, former site of the Stardust. Analysts estimated that based on previous sales, such as the New Frontier Casino, the Boyd land could have been worth $37 million an acre or $3.2 billion. Boyd decided to build Echelon anyway.
Skeptics routinely suggest that the Vegas Strip is getting overbuilt. Indeed many of the proposed condo hotel projects have quietly faded away. But still, the smart money is betting on the town. Steve Wynn and Sheldon Adelson, he of the Venetian Hotel, are expanding. Private equity firms Apollo and Texas Pacific Group are buying Harrah’s. Today also came news that MGM and its majority shareholder Kirk Kerkorian couldn’t come to terms on Kerkorian’s proposal to buy the Bellagio and the still under construction $7.4 billion CityCenter resort next to it from his own company. Analysts took that—and the latest resort news—as a sign that MGM management stills sees a lot of value in building on the Strip.
Now let’s see who’s at the table. Steve Wynn, self-made billionaire; Kirk Kerkorian, same; Sol Kerzner, same; Bill Boyd, inherited the company but built it into a billion-dollar personal fortune; Adelson, richer than all those guys combined. Apollo’s Leon Black? Easily a billionaire. Texas Pacific’s David Bonderman, probably richer than Black. Vegas may look overbuilt but do you really want to bet against all those billionaires?
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.