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Nevada Gaming Commission approves three buyouts

20 Nov 2015

By Howard Stutz
Three casino industry buyouts were approved Thursday by the Nevada Gaming Commission, including Eldorado Resorts' $72.5 million acquisition of MGM Resorts International's holdings in Reno.

Commissioners, meeting in Las Vegas, unanimously signed off on Eldorado's purchase of Circus Circus Hotel Casino - Reno and the remaining half of the Silver Legacy Resort Casino from MGM Resorts. The transaction drew praise from regulators as a boost for the Northern Nevada gaming market.

The Gaming Commission also approved Golden Gate Hotel & Casino majority owner Derek Stevens' acquisition of the remaining 35% of the downtown Las Vegas landmark from Mark Brandenburg, whose family founded the casino. Also, regulators approved SLS Las Vegas Hotel & Casino owner Stockbridge Capital Partners acquiring the 10% stake in the property held by Sam Nazarian through his Los Angeles-based SBE Entertainment.

Eldorado, which already owned half of the Silver Legacy in Reno, announced the deal with MGM in July. The company will own three resorts in downtown Reno — the Eldorado Resort Casino, Silver Legacy and Circus Circus Reno — and control almost 32% of the hotel rooms in the market. The three properties are connected via above-ground covered walkways. Eldorado Resorts President Tom Reed said the properties would be operated as a single entity.

"This is a very good thing you're doing in Reno," said Gaming Commission Chairman Tony Alamo Jr.

Reed said the company, which bought out MTR Gaming Group a year ago, wanted to take part in the economic boom being experienced in Reno. Gaming revenue in Reno is up 3.3% through September, which includes a 4.3% increase in slot machine revenue. Visitation to Washoe County is up 1.3% this year. Reed said the company's Reno resorts would account for more than one-fourth of Eldorado's annual cash flow.

Reed credited the construction of the Tesla Motors gigafactory and talk around other technology company projects with having a positive effect on the market. Eldorado would operate 4,100 hotel rooms and between 15 and 20 restaurants within the three resorts.

"For a long period of time, Reno was under pressure from Indian casinos from California," Reed said. "We're now seeing the market recover."

The Golden Gate acquisition took just a few minutes to approve.

"This is a great story relative to Mark Brandenburg," Stevens said. "We've been great partners for the last 10 years. He was my mentor coming into gaming."

Stevens told the Gaming Commission the deal was a transfer of interest and didn't disclose a sales price. Stevens and his brother acquired 50% in the Golden Gate in 2008 and raised the stake to 65% over the years. The Stevens brothers also own The D Las Vegas and acquired the closed Las Vegas Club Hotel and Casino in August.

The Golden Gate opened in 1906 as a hotel, and it now has 122 rooms.

In 2012, the Golden Gate underwent its first major renovation in more than 50 years. The improvements cost $12 million and included a five-story hotel tower with 14 suites and two penthouses. The casino floor was expanded and a high limit gaming area was added.

Stevens said Brandenburg approached the brothers a few years ago about buying the remaining stake in the casino.

San Francisco-based Stockbridge, which owned 90% of the SLS, bought out Nazarian, who was considered the visionary behind the SLS Las Vegas, having led the purchase of the Sahara in 2007 and overseeing the redesign.

Under terms of the agreement, Stockbridge will pay a licensing fee to SBE for the SLS name and the property's restaurant brands that are owned by the company. The deal will be considered by the Nevada Gaming Commission Thursday for final approval.

SLS Las Vegas is a $415 million renovation of the Sahara, which closed in 2011

The resort lost $38.7 million in the third quarter and has lost more than $122.7 million in the first nine months of the year, according to a filing with the Securities and Exchange Commission.

During the quarter, Stockbridge made capital contributions to the SLS totaling $31.1 million. For the year, Stockbridge has contributed almost $59.3 million to the resort's operations.

Last week, Stockbridge announced a deal with lodging giant Starwood Resorts Worldwide to convert the property's 289-room Lux tower, one of three hotel towers at the SLS, into the W Las Vegas. The separate, nongaming hotel will open by September.

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