Inside Gaming: Strange Bedfellows: Wynn and his Bankers - Monday 6th of February 2006

Wall Street is waiting with bated breath for details of Encore, Phase 2 of developer Steve Wynn's uppest-scale development at the Strip's north end. Expect an announcement in the next two months, sources say. But while stories swirl that Wynn really has his heart set on an urban village with up to 18,000 rooms, don't expect more news out of Wynn Resorts Ltd. than just Encore. Bankers warn there are terms in his financing that set a high cash-flow hurdle before he can go beyond the two towers and apply his creativity to the golf-course lands. More to come.

OK, here's the deal on all the public opinion surveys. It appears that in the MRC Group's most recent surveys, the question is not how many visitors are spending money, but how much money visitors are spending for the value they think they are getting. Most visitors still think Las Vegas is a great value, MRC chief Jim Medick said. There is some leakage from California, with some less-affluent folks not visiting or not visiting as often. But they are being succeeded by younger, more affluent visitors who are spending more. Not a bad trade.

More on the Harmon Avenue extension. Businesses on both sides of town say they hear there may be a one-year delay in construction, but at lease a five-year delay in access, thanks to the development of the $1.8 billion Cosmopolitan and the $6 billion Project CityCenter. They say the word is developers will use the roadway as a staging area for their developments. Cosmopolitan developer Bruce Eichner says no way. He has complex plans to keep the street clear. No word yet out of CityCenter developer MGM Mirage about how it plans to mitigate the effect on traffic and parking.

A lot of readers took exception to last week's column about the common sense behind the condo craze. In particular, they challenged the assumption that condos would rent at $300 a night. However, no one ever predicted they would. Instead, the column laid out how to analyze the possible return on investment from a $500,000 condo, making certain assumptions. If $300 a night is unrealistic, the return on investment might not warrant a purchase.

However, these are condos, not hotel rooms. Most are at least a living room, dining area, kitchen, master bedroom and major bathroom. Some are much more. Cosmopolitan units even include an oval living room and MGM Grand Residences feature two-story loft homes. MGM Mirage staff say condos already are renting for $1,000 to $2,000 a night, a lot more than a hotel room costs. But therein lies the rub in estimating returns on investments.

Gaming Wire Editor Rod Smith can be reached by e-mail at rsmith@reviewjournal. com or by phone at 477-3893.

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