Elad Properties in May agreed to acquire the New Frontier property from Wichita billionaire Phil Ruffin for $1.2 billion. The sale is slated to close before the end of August. The redevelopment, to cost at least an additional $3.5 billion, is slated to include a 3,500-room ultra-luxury hotel, condominiums, retail shops, restaurants and convention space.
The plan is to break ground for the project in 2008 and have it up and running in 2011. The goal is to recreate New York's City's Fifth Avenue on the Las Vegas Strip and be branded after New York City's Plaza Hotel, which Elad acquired in 2004 and is converting to condominiums.
As part of the sale, New Frontier will be permanently shut down before the sale closes. Longtime resort broker David Atwell, who initiated the transaction, told GlobeSt.com in May that the closing of the resort is meant expedite the sale as well as the redevelopment of the property. Had the buyer wanted to continue operating the property, the transaction would have been subject to gaming licensing, which can take a year or more, he said.
Ruffin acquired the acreage in the late 1990s for less than $200 million, according to published reports. Ruffin had been planning a Swiss-themed, Montreaux-brand resort for the site, for which he says he had lined up $2.7 billion in financing. His reasons for selling reportedly include the rising cost of construction and the relatively low 15% federal tax on capital gains.
The purchase price translates to a per-acre price of more than $34 million, double what MGM Mirage recently paid for a similarly-sized chunk of land one mile further north on Las Vegas Boulevard at Sahara Avenue. "This will be a new record price for Strip property...," said Atwell, whose company is called Resort Properties of America.
IDB is involved in other real estate projects in Las Vegas. The company's Property & Building Corp. unit is an equity investor in the Village at Queensridge, a 1.35-million-sf, 18-building development that includes 340 luxury residential units, 450,000 sf of retail and restaurant space, and subterranean parking for some 3,300 vehicles. The $850-million development in the master-planned community of Summerlin is slated for completion in late 2008. IDB is also providing the necessary equity for One Queensridge Place, a related 219-unit condominium tower that recently topped out and is 80% sold.
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