Thursday, Aug. 16, 2001 | 10:55 a.m.
Plans to build a high-rise luxury hotel and condominium complex next to the Aladdin resort on the Las Vegas Strip have fallen through, Aladdin officials said.
The Aladdin, needing cash to reduce debt, has resumed efforts to sell the 5-acre land parcel at Harmon Avenue and Audrie Street, where the development was to have been built.
In November the Aladdin signed a letter of agreement and began negotiations to sell the 5-acre land parcel to the Athena Group of New York. Athena officials said they planned to build a 350-room, five-star, non-gaming hotel on the parcel, as well as an 800,000-square-foot luxury condominium development. The development would have been attached to the Desert Passage mall at the Aladdin. The company had hoped to open the project by late 2002.
But a deal "did not materialize," said Aladdin spokesman Fred Lewis.
"We both signed (a letter of agreement), but the thing just didn't happen," Lewis said. "We did due diligence, they did due diligence, and it never went any further."
At one time, a music-themed hotel affiliated with Planet Hollywood had been planned for the site, but fell through when Planet Hollywood began struggling financially.
It now appears the Aladdin, which is having severe financial struggles of its own, is no longer interested in using the land itself. In Tuesday's quarterly report with the Securities and Exchange Commission, the Aladdin's holding company said it was considering the sale of the land "to improve the company's current liquidity."
The company's $700 million debt load, anemic cash flow and low cash reserves have raised the possibility the Aladdin will be forced to seek bankruptcy protection, a possibility the company acknowledged in Tuesday's report.
"We're looking now to sell the parcel," Lewis said. "We're very willing to enter into a discussion with anyone on it. Many people have expressed an interest in it, but we have no current negotiations."
David Atwell, president of Resort Properties of America, was the broker handling a land parcel owned by Lakes Gaming Inc. across Harmon from the Aladdin parcel. In August, the land parcel was sold to a joint partnership of Lakes and Metroplex LLC, a company owned by Las Vegas developer Brett Torino. Plans call for this 16-acre site to be developed into a non-gaming hotel, retail and residential development; construction should begin sometime in 2003, Atwell said.
"The location (of the Aladdin parcel) is excellent," Atwell said. "The only thing it lacks is the Strip frontage."
The parcel should be able to fetch about $5 million an acre, Atwell said. However, because of its small size and high value, the number of potential buyers will be limited, he said.
"You're looking at a high-rise hotel, condo or timeshare," Atwell said. "They'd definitely rather sell to someone that will complement, not compete, with their operation. They (the Aladdin) have enough trouble there as it is.
"(The size and price) limits the kind of developers that will be interested in it. But it's a very good site, and will eventually be developed into something that is very complementary to the Aladdin and our site."