The news, released along with its second quarter results, comes one month after Morgans Hotel Group announced that the JV's deadline for obtaining construction financing for its piece of the project had been extended to September 15, 2008. "Given Boyd's announcement and the difficulties in the credit markets, MHG believes that the joint venture will be unable to secure financing at favorable rates and conditions by [the deadline]," states MHG's Friday morning announcement. "MHG does not intend to further extend the joint venture agreement on its current terms but expects to evaluate future proposals relating to the project with Boyd."
Located immediately south of Circus Circus, work on Echelon officially got underway in June 2007. The 87-acre was slated to hold approximately 5,000 rooms in five hotels, 750,000 sf of convention and meeting space, 300,000 sf of retail, two live entertainment venues, 30 dining and nightlife venues, a 140,000-sf casino and parking for 8,000 cars.
In April, Boyd announced that foundation work was complete for its three wholly owned hotels on the property -- Hotel Echelon, The Enclave, and Shangri-La Las Vegas – that steel was being erected for the low-rise portion of the development, which encompasses much of the common area for three of the five hotels, and that excavation for High Street, where the retail promenade and meeting center would be, was complete and foundation work was well underway. The project was on-budget and on-schedule to open in the third quarter of 2010, the company said.
Boyd's wholly owned piece of the project was slated to include 3,000 of the 5,000 rooms in two high-rise towers, Hotel Echelon and the Suites at Echelon, each with its own full-service spa, as well as the casino, two theaters (one with 4,000 seats and the other with 1,500 seats), 25 restaurants and bars and a pool area. The rest of the site was to be developed via joint ventures and include three additional hotels, a 750,000-sf outpost of the Las Vegas ExpoCenter, 300,000 sf of retail space, and several more restaurants, bars and nightclubs.
In addition to its JV with MHG for the Delano and Mondrian Las Vegas, Boyd had inked a management agreement with Shangri-La Hotels and Resorts for the one other hotel on the property, Shangri-La Las Vegas. The retail was to be developed in a promenade format by a partnership of Boyd and General Growth Properties.
The slate for Echelon was wiped clean in early 2007 by LVI Services Inc., which demolished 27 structures including the main Stardust hotel tower, a 32-story, 1,500-room structure that among other things was the setting for the award-winning Hollywood movie "Casino."
Echelon was to be the first Strip resort for Boyd, which has heretofore catered to locals with nine off-Strip casinos and casino-hotels. In addition to its Vegas-area properties, Boyd owns seven other gaming entertainment properties located in New Jersey, Mississippi, Illinois, Indiana, and Louisiana.
News of the delay pushed Boyd's share price up 30% in early trading Friday. Investors had been concerned with the glut of development on the Strip in the face of deteriorating economic conditions. The company also anoucned Friday that it was suspending dividends, and that its net income dipped to $21.7 million from $22.1 million a year earlier.
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