Investors cashing in on Las Vegas Strip land boom
LOS ANGELES (Reuters) - When Kansas-based real estate investor Phil Ruffin paid $165 million for 41 acres on the famed Las Vegas Strip in 1998, his critics said he overpaid by $15 million.
Soon, Ruffin will be laughing all the way to the bank.
In August, he is scheduled to close a $1.24 billion sale of 34.5 acres of that Strip property, which is home to the New Frontier hotel and casino, to Elad Group, owner of Manhattan's Plaza Hotel.
"I did good. That's the deal of a lifetime," said Ruffin, who with partner Donald Trump is planning a second condo tower on the remaining acreage.
Ruffin joins a pack of investors profiting from soaring real estate values in the U.S. gambling haven, where prime Strip property prices have roughly doubled in the last three years. Recent deals have landed anywhere from $10 million per acre to Ruffin's $36 million per acre.
Billionaire investor Kirk Kerkorian is also showing a gain -- to the tune of $3 billion -- without even closing a deal.
His Tracinda Corp., which owns 56 percent of MGM Mirage Inc. (MGM.N), in May offered to cherry-pick the company's luxury hotel, casino and entertainment center Bellagio, as well as its massive, $7.4 billion CityCenter project now under construction on the Strip.
Tracinda also said it would consider other options that effectively put the entire company in play.
Kerkorian voided the offer on Wednesday after MGM announced a new Strip project with Atlantis developer Kerzner International Holdings Ltd. MGM will contribute land at a value of $20 million per acre for the project, which Tracinda expects will unlock untapped shareholder value.
Even though MGM shares fell on the news, they remain 28 percent higher as a result of 90-year-old Kerkorian's gamut, increasing the value of his MGM holdings by $2.8 billion to $12.8 billion.
MADONNA OF REAL ESTATE
No stranger to reinvention, Las Vegas as a destination has charted a path as varied as the career of pop star Madonna -- going from pitching itself as a sinful getaway, and then as a family-friendly vacation spot, and back again.
For roughly two decades starting in the 1940s, Vegas was the realm of mobsters, Rat Pack crooners and topless showgirls.
Billionaire Howard Hughes led a corporate boom in the 1960s and gambling became the more legitimate-sounding "gaming." Then resorts raced to cater for families with Circus Circus's indoor theme park and the Statosphere's 1,000-feet-up thrill rides.
The city has since sought to return to its roots with its "What Happens Here, Stays Here," ad campaign. Continued...
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