Las Vegas Sun

September 15, 2019

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Station eyes buying Santa Fe

Station Casinos Inc. closed the door on a potential new competitor in Henderson today, announcing a deal to buy a 40-acre land parcel adjacent to Galleria mall that was to be the site of a Santa Fe Gaming Corp. $130 million hotel-casino.

The deal also reopened the door for a Station takeover of the Santa Fe hotel-casino in northwest Las Vegas, as Santa Fe granted Station a right of first refusal to acquire the property.

"This is just a natural extension of our strategy to remain the clear leader in the Las Vegas locals market," said Glenn Christenson, chief financial officer of Station. "It's one of the very few 'A' sites left in Las Vegas, and it limits (Santa Fe) competing with us in the future.

"We believe the Las Vegas locals market has the best demographics of any locals market in the country, and we will continue to invest in this market."

Christenson declined to comment on whether a deal to acquire the Santa Fe hotel-casino was imminent. But Station has been pursuing the property off and on since at least 1996.

Santa Fe officials could not be reached for comment.

As part of today's deal, Santa Fe agreed to a 15-year non-compete pact that bars it from operating a gaming business within 5 miles of either Boulder or Sunset Station hotel-casinos.

Station paid Santa Fe $37.25 million for the Henderson land, the right of first refusal and the non-compete agreement.

The land parcel is near U.S. 95 across from Sunset Station and adjacent to Galleria mall. Santa Fe has been attempting to build a $130 million, 290-room hotel-casino project on the land for years, but has been unable to finance the project. The parcel has, however, already been approved by the city for gaming use.

"We don't have a timeframe today for developing that property," Christenson said. "What we have is an inventory of excellent sites that we can develop as business dictates."

Station also owns vacant land near its Sam's Town and Wild Wild West properties.

The land parcel was owned by Santa Fe subsidiary Sahara Las Vegas Corp. As part of the Station deal, all liens will be released on the Henderson property.

The $37 million cash is badly needed by Santa Fe, whose liabilities exceeded its assets by more than $70 million as of June 30. The primary source of debt, Santa Fe said in Securities and Exchange Commission filings, was $57.5 million in debt held by Sahara that is now in default.

Santa Fe valued its land holdings, including a lot adjacent to the Sahara hotel-casino on the Strip, at $38.19 million as of June 30.

The Henderson land and the Santa Fe hotel-casino led Station to initiate merger talks with Santa Fe in the fall of 1996, according to previous court filings by Santa Fe. These negotiations continued through 1998, and came to include Crescent Real Estate Equities Co. of Fort Worth, Texas, which was pursuing both Santa Fe and Station.

"We almost bought this property when Santa Fe bought it years ago," Christenson said. "We've always believed it's a fine piece of property ... it's located right in the middle of the highest concentration of retail development in our state."

The three-way negotiations never came to fruition. Station agreed to an acquisition by Crescent, but that deal later fell apart. Crescent then offered to buy out Santa Fe for $20 million in stock and $209 million in assumed debt, but that offer was rejected.

Today's deal does not involve Santa Fe's Pioneer Hotel and Gambling Hall in Laughlin, which is in bankruptcy. Nor does it include Santa Fe's Strip land, which Santa Fe says it is retaining "for future possible development."