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Property value of Paris/Bally's and Rio All Suites

Last edit: jucifers on Wednesday, 8th February 2017 5:26 pm
Last response by Drake 14th February 4:24am

Recent speculation on the property value of Casino Royale piqued my curiosity about the property values of Paris/Bally's and Rio All Suites. Here are links to several articles, including some about recent sales of Cosmopolitan ($1.73 billion) and Palms ($313 million) and the non-sale of Mirage ($1.3 billion offer rejected).

Would anyone care to take a crack at estimating the value of Paris/Bally's and Rio based upon these sales?

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 VegasFanboy responded on Thursday, 9th February 2017

I don't have the numbers in front of me, but a start would be determining the cash flow multiple from the hotels that have been sold. What was their selling price based on their cash flow from the previous year?

Then, apply a similar multiple to that of the cash flow of Paris, Bally's, and the Rio. Of course, location matters, and the value of center Strip properties will command a higher multiple than that of Rio, which is more akin to the Palm's sale.

This is a rudimentary method.

I'm not sure exactly what the standard casino industry discount rate is or how they are applying the discounted cash flow method.

 MinVegas responded on Saturday, 11th February 2017

So is "property value" determined as "what this is worth in a sale?" Because the sale price of a resort is going to be a multiplier of revenue. On top of that, we don't have a whole lot of sales going on anymore to base estimates off of.

My context for calculating imaginary sale prices? MGM sold Treasure Island to Phil Ruffin at a cost of 7x annual revenue. Revenues were lower because of the recession, but everyone who looked at that sale felt MGM was getting fair value for the place.

I don't know if Caesars breaks down their numbers by property. MGM used to but stopped doing that at some point.

 jucifers replied on Saturday, 11th February 2017

"So is 'property value' determined as 'what is this worth in a sale?'" Yes, that's what I was asking. I would imagine that location and property acreage would also factor heavily into the sale price. Maybe that would be an easier value to estimate, since Caesars doesn't seem to release earnings per property?

 Drake responded on Tuesday, 14th February 2017

No clue about value, but my question is: now that Caesars is emerging from bankruptcy, does anyone think they're going to sell any of their properties?