Crown Resorts, Oaktree Capital, Former Wynn Executive to Partner on Las Vegas Casino Project --update--

By Dow Jones Business News, 
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Crown Resorts, Oaktree Capital, Former Wynn Executive to Partner on Las Vegas Casino Project -- Update


By Kate O'Keeffe

Crown Resorts Ltd., the casino company controlled by Australian billionaire James Packer, plans to partner with Oaktree Capital Management L.P. and former Wynn Resorts Ltd. executive Andrew Pascal on a Las Vegas Strip casino project.

The investors are part of a growing chorus betting on a recovery in the world's second-largest gambling market after the financial crisis prematurely halted a building boom in the city, bringing it to its knees.

The parties bought a controlling interest in a 34.6 acre piece of land on the Las Vegas Boulevard, according to a joint statement issued Monday. Crown, the venture's majority owner, has spent US$280 million on the project so far including the land acquisition, according to its statement to the Australian Securities Exchange. The investors said they expect to break ground in late 2015 and finish the project in 2018.

The site was formerly owned by Israeli businessmen whose plans to build a casino-resort modeled after New York City'sPlaza Hotel were upended by the recession. It is adjacent to a site planned to host a new $4 billion casino- resort by Malaysian gambling giant Genting Bhd., which took over Boyd Gaming Corp.'s Echelon project, halted in 2008 due to the crisis.

Mr. Packer felt the pangs of the financial crisis personally with several investments in Las Vegas that went awry during that period including one in the Fontainebleau casino-resort just up the road from his new project's site. Fontainebleau Las Vegas halted construction and sold off its furniture after falling into bankruptcy protection in 2009. Crown and Mr. Packer only settled a lawsuit filed against them by a group of lenders to that project in June.

Meanwhile Crown has been focused on casino ventures on the other side of the world including in the Philippines, Sri Lanka, at home in Australia, and in the world's largest gambling hub--the Chinese territory of Macau.

But lately casino executives, investors and analysts have been talking up the Las Vegas Strip's prospects again. The $415 million SLS Las Vegas, built on the site of the former Sahara hotel and casino of the Rat Pack era, is set to open this month. In May private-equity giant Blackstone agreed to pay $1.7 billion in cash to Deutsche Bank AG for the Cosmopolitan of Las Vegas, another Strip casino-resort that ran into financial trouble during the downturn. Caesars Entertainment Corp. and MGM Resorts International have also invested in various casino and entertainment projects on the Strip recently.

Union Gaming Research analyst Robert Shore said his firm has seen "a clear positive demonstrative change" in business in Las Vegas over the past six to nine months. Gambling revenue on the Las Vegas Strip rose 3.5% during the first half of 2014 over the previous year and revenue per available hotel room in the area rose 9.9%, official data show.

"All the development coming to Las Vegas collectively lends credence to the Strip recovery story, which was further highlighted by today's news as very smart and highly sophisticated gaming investors and developers are looking to deploy their capital in the market," said Mr. Shore.

Write to Kate O'Keeffe at kathryn.okeeffe@wsj.com

Corrections & Amplifications

Andrew Pascal is a former executive at Wynn Resorts Ltd. An earlier headline on this story incorrectly said he was a current executive.

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