Harrah’s Steps in as New Owner of Planet Hollywood Las Vegas
- Feb 25, 2010
February 25, 2010
By Barbra Murray, Contributing Editor
Planet Hollywood Resort & Casino has come under new ownership now that a subsidiary of Harrah’s Entertainment Inc. has taken over the reins. PHW Las Vegas L.L.C. received approval from the Nevada Gaming Commission to officially own and manage the prominently located Las Vegas Strip property, taking it–and its remaining debt of $554 million–off the hands of previous owners BH/RE L.L.C.
Located on the site of the former Aladdin Hotel, Planet Hollywood opened its doors in 2007 with 2,500 guestrooms, 100,000 square feet of gaming space, 75,000 square feet of meeting space and 170 retail shops. Financially debilitated by the frigid credit market and the drastic recession-induced downturn in the casino resort industry, the property had been saddled with an approximately $860 million loan balance, according to a September 2009 filing with the Securities and Exchange Commission. Then Harrah’s came along and reportedly gobbled up over $300 million of that debt at a cut-rate price of approximately $70 million last year. That move was followed by Harrah’s takeover of management responsibilities in January, and most recently, its grab of full ownership.
With the acquisition of Planet Hollywood, Harrah’s now has seven casino resorts lined up in a row along the Strip. “From that standpoint, it makes good sense for them,” Jacob Oberman, director of gaming research and analysis with real estate services firm CB Richard Ellis’s Global Gaming Group, told CPE. “And they know Las Vegas, the strengths and weaknesses; they obviously think they can do well.”
Harrah’s isn’t the only investor that has recently snapped up a premier Strip property in distress. Billionaire financier Carl Icahn’s Icahn Enterprises L.P. just acquired the beleaguered and unfinished Fontainebleau casino project for a mere $150 million.
However, these transactions aren’t representative of the norm, Oberman said: “A year ago, I would have said we would have seen 5 to 10 of these Planet Hollywood deals, but we haven’t because banks have shown a willingness to restructure debt. They’ve decided to let it roll for a better day, so it’s unlikely we’re going to see a wave of these deals.”
So a hoard of fire sales is not on the horizon this year, nor are there any hints of a big reversal of fortune for the gaming industry.
“The market is very depressed at the moment,” Oberman said. “We project 2010 will be a down year; individual properties will see an across the board decline in revenue and profit this year. Some think this will be an up year or just a flat year, but I think they’ll be proven wrong. Investors are wary right now, and the debt markets are skittish.”