Plans are advancing for redevelopment and re-opening of the Sahara hotel-casino on the Las Vegas Strip, its owner announced Thursday.
The announcement came as the Las Vegas gaming industry is seeing improvements thanks to higher visitor counts – Las Vegas visitation was up 5.1 percent through the first six months of 2011.
The city, however, is still struggling from an over-supply of hotel rooms and reduced spending by recession-weary consumers. For instance the Las Vegas Hilton, just down the street from the Sahara, is facing potential receivership and foreclosure.
Sahara owners SBE Entertainment, known as a nightclub operator, and Stockbridge Real Estate Funds today said they had invested in the project by buying its mortgage debt and by hiring Gensler Architects and PENTA Building Group.
"We've been working with Gensler and PENTA to evaluate a range of options for the property," SBE CEO Sam Nazarian said in a statement.
The companies said they had finalized their purchase of the mortgage debt they used to acquire the historic property in 2007 for about $350 million. That mortgage was for $288 million – but it wasn’t disclosed how much was due at the time of the recent purchase or what SBE and Stockbridge paid for it.
Nazarian in 2010 told Bloomberg News he was in talks with lenders about restructuring the Sahara's debt and had reached a forbearance agreement with the primary lender, Royal Bank of Scotland Group Plc. This indicates the debt was distressed and was purchased at a discount.
"We've invested substantial new equity to acquire the note, allowing us complete flexibility to re-envision this property," Nazarian said in his statement Thursday.
Today’s announcement offered no specifics on a timetable for reopening the Sahara, whether the redevelopment would involve a major remodel or an implosion of the existing structure and development of a new one, what the redevelopment would cost and how it would be financed.
A copy of the statement was provided Wednesday to the Wall Street Journal for a story Thursday – a signal Nazarian is stepping up publicity about the Sahara as he looks for financing to redevelop the property.
The Sahara, with 1,720 rooms, opened in 1952. While it was known to be struggling during the recession because of its age and inability to compete, the March 11 announcement it would close on May 16 still shocked the community.