Station Casinos said Tuesday that it is buying the off-Strip Palms resort for $312.5 million, yet another recent example of locals-oriented casino operator expanding in the valley.
Red Rock Resorts Inc., Station’s new corporate name following its recent initial public offering, announced that a subsidiary of the company, Station Casinos LLC, has struck a deal to acquire the Palms. The Palms deal follows multiple other acquisition announcements from rival Boyd Gaming Corp., which also counts Las Vegas locals as a key customer base.
“With the acquisition of the Palms we gain a leading gaming asset in Las Vegas with key strategic benefits in the Las Vegas locals market and close proximity to the Las Vegas Strip,” Marc Falcone, Red Rock’s chief financial officer, said in a statement. “With its appeal to both Las Vegas residents and tourists alike, the Palms is a hybrid gaming property that is uniquely positioned to benefit from the strong economic trends in Southern Nevada and record visitation levels in Las Vegas.”
Boyd, meanwhile, announced in April that it was buying the Aliante in North Las Vegas — a former Station casino — and the two Cannery casinos in the valley. Like Station, Boyd has reflected an extremely optimistic outlook about the local economy.
Red Rock said it expects the Palms transaction to close during the third quarter of this year, pending approval from gaming regulators and the expiration of a waiting period under federal antitrust law.
The Palms, located on Flamingo Road just west of Interstate 15, features a 95,000-square-foot casino, about 710 hotel rooms across two towers, a race and sportsbook, 60,000 square feet of meeting and convention space, a spa and a range of restaurants, nightlife, entertainment and pool options.
During the first full year of owning the Palms, Red Rock said it expected the resort to generate $35 million in earnings before interest, taxes, depreciation and amortization.
“It seems like a great acquisition for Station Casinos,” said broker Michael Parks of CBRE Group. “It just gives them an excellent property in an outstanding location near the Las Vegas Strip. They’ve had a strong locals customer base in the past, which they can capitalize on and service the locals market, while also extending their customer base to include some tourists.”
The Palms opened in 2001 with a price tag of $265 million and developed a reputation for being a celebrity hangout. Parks said that George Maloof, whose family developed the casino, made the “extremely smart” decision of positioning it to both tourists and locals.
TPG Capital and Leonard Green & Partners became the Palms’ majority owners in 2011 as the resort sought to restructure hundreds of millions of dollars in debt. Maloof’s stake dropped to about 2 percent.
Station used to own a minority stake in the Palms, which it acquired not long after it bought another Maloof-owned business: the casino now known as Fiesta Rancho. Also, Brian Greenspun, editor and publisher of the Las Vegas Sun and VEGAS INC, used to have a minority stake in the Palms’ holding company, but he said he no longer has any interest.
Palms CEO Todd Greenberg said in Tuesday’s statement announcing the sale that the resort was “very proud” of its employees and “extremely excited for all the great opportunities” they would have under the new ownership.
The Palms deal introduces a new wrinkle for the Culinary Union, which has been trying to organize workers there and has long clashed with Station as it has unsuccessfully sought to organize workers at that company.
Geoconda Arguello-Kline, the union’s secretary-treasurer, noted in a statement Tuesday that the union had “seen many casinos and owners come and go” over the years, but “the Union and workers who helped build this town will always be here.”
“The workers at the Palms have made it clear that they want a fair process to choose whether to unionize,” Arguello-Kline said. “We will continue to work with the Palms employees until they achieve their goal.”
Red Rock officials are expected to shed more light on the deal during their first quarter earnings conference call on Thursday.