Las Vegas Sun

August 22, 2019

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Wynn buys D.I.

In acquiring the Desert Inn for $270 million, Steve Wynn purchased one of the largest available land parcels on the Strip -- land with unlimited potential for new development, Wynn said this morning.

"This is the most powerful piece of real estate in Nevada, possibly in the western United States," Wynn said. "It's an extraordinary piece of property, with the opportunity to do just about anything."

Wynn entered into an agreement with property owner Starwood Hotels & Resorts Worldwide Inc. Thursday evening to acquire the Desert Inn, its golf course and 32-acre vacant land parcel. Starwood expects the transaction to close by June 30. Wynn and his wife, Elaine, will be the only shareholders.

Wynn will depart as chairman and chief executive of Mirage Resorts Inc. when it's acquired this year by MGM Grand Inc. for $6.7 billion.

Katie Meyer, Starwood spokeswoman, said Starwood's directors formally approved Wynn's offer late Thursday during a board meeting in Rome.

"Though we received several attractive offers for the Desert Inn, the speed and certainty of this transaction made it the most attractive for our shareholders," said Barry Sternlicht, chairman and chief executive of Starwood.

But Wynn's eventual plans for the property remain unknown, as are Wynn's plans for his half of the palatial, $400 million art collection now housed in the Bellagio.

"I haven't decided (what to do with the art) yet," Wynn said.

Nor should it be assumed that Wynn will ultimately move the art to the D.I., a gaming analyst said today.

"I guess it really depends on what the ultimate design of his property will be," Prudential Securities' Joe Coccimiglio said. "He's very creative, and may have a whole new concept that may not involve art at all. I don't know if you can count on that (the art moving to the Desert Inn)."

Most often mentioned as the land canvas for Wynn's new vision is the 32-acre land parcel at the northeast corner of the Strip and Sands Avenue. But the entire Desert Inn property, including the golf course and the hotel, spans 200 acres.

Wynn isn't saying yet what his plans are for the huge land parcel or the upscale 50-year-old resort. He ticked off the property's advantages -- rights to huge amounts of water; frontage on the Strip, Paradise Road, Sands Avenue and Desert Inn Road; and easy access to both the Las Vegas Convention Center and the Sands Expo Center.

Then, referring to how much he'd paid in taxes over the years, he deadpanned that he was thinking about going into farming.

"I have a brand new and revolutionary scheme," Wynn added. "I plan to plant the land half in alfalfa, half in corn. We could get that money back as a subsidy."

Farming talk aside, gaming industry observers, analysts and business people expect big things from Wynn.

"Whatever he builds, it will be one up on the last thing he built," David Atwell, a local hotel-casino broker, said. "It's really exciting for Las Vegas to continue that legacy of creation.

"It's very significant for this town. It will mean a resurgence of energy and business for the north end of the Strip. It's literally a resurrection of an area that's become somewhat blighted, actually."

Jim Arnold, secretary-treasurer of Culinary Union Local 226, which has a contract with the Desert Inn, also applauded the news as good for labor. Wynn has warm relations with the Culinary.

"In Mr. Wynn's case, I'm very comfortable, because I know that any project he takes on, he'll do a great job," Arnold said. "It's great for the community and especially the workers. Whatever he does, he does first class.

"We never want to lose good property owners like that."

Benefits should also spill over to other properties, Coccimiglio said.

"(Wynn) tends to build properties that create more (demand) than they can supply," Coccimiglio said.

One of the most immediate beneficiaries may be Sheldon Adelson's Venetian and Sands Expo Center, both directly across Sands Avenue.

"I think it's terrific for Las Vegas and fantastic for us, because you could not have a better, more creative neighbor in a development project than Steve Wynn," Bill Weidner, president of the Venetian, said. "It enhances the value of Las Vegas, and it increases the value of our property."

With Wynn expected to build across the street from the Venetian, Adelson continuing to move forward with plans for a second hotel tower, and the expansion of the Fashion Show mall, Weidner said the intersection of the Strip and Sands will soon rival the hottest corners of the Strip.

"It'll bring synergy to those four corners," Weidner said. "With (Wynn's development) and our Phase 2, it will make that a terrific focal point on the Strip."

One element of the project, at least eventually, appears to be timeshares. In its announcement this morning, Starwood said Wynn granted Starwood the right of first refusal to develop timeshares at the Desert Inn.

Starwood has been battling the homeowners at the Desert Inn Golf Course for the right to develop timeshares on the golf course property. It isn't known if Wynn would proceed along that course, but on Tuesday evening Wynn's partner in the Park Towers condominium project, Irwin Molasky, told homeowners he was willing to buy their properties at prices above appraised values.

To some Desert Inn Estates residents, rumblings of Wynn's plan were welcome news.

"I've always found (Wynn) to be very reputable; a very fair guy who didn't cheat anybody," said Frank Catania, who has lived in the neighborhood that lines the Desert Inn golf course for 42 years. "If I get a decent value, I'll be happy to move. To me, with all the problems we've been having, I'll be happy to get out of here.

"I don't know what he's going to do with the property but I'm sure it will be something spectacular. He doesn't do anything half-assed."

It's an issue that has to be eventually resolved to realize the full value of the Desert Inn, Atwell said.

"The development potential of the golf course properties is literally unlimited," Atwell said. "That's got to be worked out somehow, someway."

Although Wynn easily had the funds to cover the Desert Inn purchase himself -- he will gross more than $500 million when Mirage Resorts is sold to MGM Grand -- no one expects Wynn to have any problem getting outside cash to launch ambitious new developments at the Desert Inn.

"He could go to the (public) bond market, but he said he doesn't want to be that arena again," Coccimiglio said.

Instead, Coccimiglio expects Wynn would reach out to private investors if he needed to raise more cash.

"I would think there are people willing to bet on his track record," Coccimiglio said.

And being a private shareholder is right where Wynn wants to be, a Las Vegas analyst said.

"Steve Wynn has had just about enough of Wall Street," said Dave Ehlers, chairman of Las Vegas Investment Advisors. "Whatever he wants to do with his money is his own business, and we should wish him well.

"Today's Las Vegas would not be today's Las Vegas without Steven Wynn. He deserves to be left alone by (analysts) like me."

Sun reporter Adrienne Packer contributed to this story.