Home » VT News » Penn Gets M Resort In $230M Debt Swap

Penn Gets M Resort In $230M Debt Swap

By Chuckmonster on Friday, 8th October 2010 10:14am
  » filed under Mergers & Acquisitions  comments: 8


The rumors are now fact.

After playing footsie with nearly every semi-available casino up and down the Strip, Penn National CEO Peter(ino) Carlino finally found a fit for his tire kickin' foot - The M Resort!

And oh holy shit what a deal they got! Pulling a page out of Harrah's P.Ho playbook, Penn National bought out all of the debt notes for the property being held by the Bank of Scotland - including the chunk that belonged to M's partner - MGM Mirage International Resorts - for $230.5M U.S. dollhairs.

Admiral reminds us that M cost $1B to build + $240M for the real estate.

From the business side of things, the big loser here is obviously the Marnell Family... unless they somehow managed to vacuum out a coupla billion dollars of profit in the two years they've been operating. Penn? They got a brand new property in Las Vegas for at fire sale prices and still have 3/4 of that billion bucks they've been sitting on to buy the Mirage.

From the tourist side of things, we don't really know what to expect. If Penn takes out the exacto knife and starts cutting corners, the appeal of the resort for non-local tourists - semi-private, intimate luxury - will be placed in serious jeopardy. If they keep the current operations in place, drive down prices by cutting costs / quality (dining specifically) the M could become Penn Station in no time.

Tagged: penn national   peter carlino   m resort   


Comments & Discussion:

May 2007: Elad buys New Frontier for $1.24 billion.
March 2009: Phil Ruffin buys Treasure Island for $775 million. February 2010: Harrah's buys Planet Hollywood for $654 million. October 2010: Penn buys M Resort for $230 million.

If M is only worth $230 million, how much are Rio and the Palms and the Mirage worth now?

don't forget Icahn plunking down $150 million in black chips for a 3/4 finished, $3 Billion F-Bleu.

shit, let's all start pooling our spare change - at this rate i'll bet we could get Terrible's for a couple thousand.

Why anyone would spend $1.24 billion in the first place to build a swank locals casino halfway to Jean is beyond me. $1.24 billion and only 390 rooms? Were they delusional? How on earth did that ever look like a smart idea?

Even though Penn got a good price, I'll be disappointed if they don't swoop in and buy a decent strip property too. The Harrahs/MGM stranglehold has gotta go.

Is there any proof that M Resort actually cost $1.24 billion to build? Maybe the $1.24 billion boast was just hype. Encore was built about the same time; it cost $2.3 billion and has 2,034 rooms - a cost of $1,131,000 per room. M Resort supposedly cost $1.24 billion and has only 390 rooms - a cost of $3,179,500 per room.

Proof? Well, the land did cost $240MM - that's easy to verify w/ the county. The loans were $1B and that's been widely reported. I guess I don't understand how they would fake it. If they did, that's a huge story and Clark County's tax authority would probably be interested too.

Encore probably isn't the best comparison because it wouldn't really function as a standalone resort - without WLV next door, it doesn't have all the components it needs to succeed - between back of house support and front of house amenities. The better comparison may be Red Rock and it's subsequent expansions. Still, M cost more, if these numbers are to be believed.

Yes - the cost per room is high but if you've been there, you'll see the materials are all very high quality so perhaps it's less hard to believe. The other thing is that maybe 40% of the parcel is undeveloped - the master plan includes a bunch of retail, more meeting space, theaters, etc...

M may have been doomed from the start but if you go back to the once-upon-a-time when it was being developed, money was growing on trees and maybe it didn't seem as crazy.

For me, the story here is the entry of PENN into the Las Vegas market and to a lesser extent, the massive deal they got, vis-a-vis the stated cost of the resort.

Like Drake said, I think theyre wasting their time- Sure they got a steal from the building price, but the location SUCKS! Theyre as much in North Jean as Las Vegas, and I dont see them pulling a Bob Stupak, saying theyre 'On the Strip'. If they wanted to pay someone's debt, it should have been the Riviera- Sure its old and not as nice as the M, but at least yould have a shot at some foot traffic.

If Penn is going to get something on the strip, this is a huge first step as it allows them to begin the licensing process in Vegas, as I don't believe they are yet. Definitely a big step for them, and a little sad for the Marnell's who seem to build and run what their customer's want, but can't seem to keep their properties, although the Rio was sold by their choice I believe.

I would hate to see Penn get the Mirage..but MGM International, or whatever its being called this week, has to pay off the CityCenter debt by whatever means are necessary..

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