LAS VEGAS— Entering the downtown area here as part of a massive revitalization project may be a big gamble, but Barrick Corp. executives like the odds. In true Vegas fashion, the company— through its wholly owned subsidiary Barrick Gaming Corp.— is acquiring four hotel-casinos, and is in contract to buy two more properties, albeit boutique in nature. It also holds an option and a first right of refusal on another. Late last month, Barrick closed on an $82 million deal to buy the Plaza Hotel & Casino, The Las Vegas Club, Gold Spike Hotel & Casino and the Western Hotel. These properties represent 1,875 rooms, however over the next three years, Barrick intends to pump approximately $150 million into renovation projects that will add 2,400 rooms to the mix, 1,200 of which will have a mixed-used component, Stephen Crystal, co-founder, vice chairman and president of Barrick Gaming, told HOTEL BUSINESS®. “The appeal for us, particularly this acquisition, is that the down Las Vegas market has 10,000 hotel rooms. And those rooms traditionally have run in excess of 90% occupancy,” Crystal said. “The perception is that it is a no- growth market. But the main reason is because no one has added any significant hotel rooms since the Gold Nugget did it [about 20 years ago],” he said. To execute the deal, Barrick arranged about $75 million through a $45 million loan from Frankfurt, Germany-based Aereal Bank and $30 million in mezzanine financing from New York-based Fortress. The real caveat to the deal is the extra real estate component including the seven-acre plot adjacent to the Plaza, Crystal said. Barrick will own the properties along with its investors, and manage them as well therefore gaining some operational efficiencies. “Up until now, these properties were owned by the same individual [Jackie Gaughan], but were managed and operated as separate entities. We will consolidate the operations into one management apparatus,” he said. Barrick has good reason to believe more hotel rooms are needed in the area. Las Vegas is developing the 61-acre site near the Plaza and there are plans for an outlet mall, possibly a performing arts center and a new furniture mart, which is expected to be the largest in the country, he said. “This will generate a million new visitors to downtown and generate up to 10,000 hotel room nights of new demand. We hope to be in a position to capitalize on that demand,” he said. To help do this, Barrick is planning a major facelift to the acquired properties that includes: eliminating the brick front of the Las Vegas Club on Freemont St.; connecting the Las Vegas Club to the Plaza via a deck across Main Street; building a 1,200 room hotel tower next to the Plaza and another 1,200 unit time share tower on top of the planned transportation building; and redeveloping the Western by building a Latino-themed property, Crystal said. Also part of Barrick’s grand plans are the acquisitions of the Nevada Club and Queen of Hearts hotel properties representing another 400 hotel rooms. At presstime, the company was under contract for the properties and expecting to close this month, according to Crystal. “We will rehab both hotels into boutique hotels. We already have some interest from some local and national hotel brands,” he said. In addition, Barrick has the first right of refusal to purchase the El Cortez Hotel and Casino. The hotel has 299 rooms and an additional 102 rooms located at its Ogden House Hotel adjacent to its main tower. Although Barrick is new to the Las Vegas hotel ownership scene, it does have experience in hospitality and gaming. The company is involved in a joint venture with Station Casino in a riverboat/hotel/entertainment complex in Kansas City, MO.
