Vegas Hilton to Get L.A. Owner
The owner of the venerable Las Vegas Hilton -- where Elvis made his comeback and Liberace tickled his ivories -- said Wednesday that it was selling the historic property to Los Angeles investment firm Colony Capital for $280 million.
After purchasing the property from Las Vegas-based Park Place Entertainment Corp., Colony Capital plans to remodel the 34-year-old site by repositioning the casino floor, completing a renovation of the guest rooms and perhaps building more facilities.
Jonathan Grunzweig, a principal at Colony Capital, said the improvements would cost “a substantial amount” but wouldn’t give an exact figure.
“The Hilton is a legendary Las Vegas property that has fallen out of step” with its historic stature, Grunzweig said. “As contrarian real estate investors, we believe this is a fantastic opportunity ... to restore this asset to its rightful place” among casinos in the nation’s gambling mecca.
Hilton Hotels Corp. will continue to operate the 3,000-room hotel and casino, which adjoins the city’s convention center just off the Las Vegas Strip.
When it opened in July 1969 as the International, the hotel -- developed by investor Kirk Kerkorian -- was the largest in Las Vegas. Barbra Streisand was the featured performer at the opening gala, and Elvis Presley made his famous comeback there during the hotel’s first month.
Kerkorian sold the property to Hilton in the early 1970s. Hilton spun off its gaming division in 1998, creating Park Place. The company, the world’s largest gambling enterprise, with $4.6 billion in annual revenue, will change its name to Caesars Entertainment Inc. next month in acknowledgment of its flagship casino, Caesars Palace.
Colony Capital was formed in 1991 by Thomas Barrack, a former principal in Texas investment firm Robert M. Bass Group. He also served as deputy undersecretary of the Interior Department in the Reagan administration.
Privately held Colony has invested $9 billion in thousands of properties including Resorts International casino in Atlantic City, N.J. The company also is a partner in Accor Casinos, which operates properties in France, Belgium, Cairns and Malta. This month, Colony’s Japan office bought a 1,052-room hotel and a domed baseball stadium that is home to the Fukuoka Daiei Hawks for $721 million.
Colony Capital does not disclose revenue or profit information.
The 30-story Las Vegas Hilton has three casinos, 13 restaurants and more than 200,000 square feet of conference rooms on 60 acres. It will be connected to the Strip next month by a $650-million, four-mile monorail slated to stop at the convention center.
The Hilton is considered a middle-market property that doesn’t compete with newer, high-profile venues on the Strip such as the Bellagio, the Venetian or Mandalay Bay. The improved Hilton will continue to target the convention niche, Grunzweig said.
Colony “is getting a good solid property at a really decent price,” said gaming industry observer Anthony Curtis, who publishes Las Vegas Advisor, a consumer newsletter. “It’s got a big name and a hell of a history” that has included headliners such as crooner Wayne Newton.
Less illustrious events in the Hilton’s past include a 1981 fire that killed eight and the 1991 Tailhook Assn. convention that became notorious for charges of sexual harassment and drunken debauchery that were leveled against some of the naval aviators who attended.
The property nearly traded hands three years ago, when it was announced that Los Angeles developer Ed Roski Jr., who built Staples Center, would buy the Hilton from Park Place for $365 million. The deal collapsed early in 2001, and Roski sued to recover $20 million in deposits and fees. Park Place settled the suit in March of this year and said it would take a one-time charge of $3.8 million.
The sale to Colony Capital would be good for Park Place’s bottom line, said Harry Hagerty, chief financial officer of Park Place, whose shares Wednesday fell 9 cents to $10.77 on the New York Stock Exchange before the announcement. The company intends to use net proceeds from the sale -- estimated at $265 million after taxes -- to reduce debt.
Hagerty said the company would report a gain of $85 million, or 28 cents a share, in the quarter in which the transaction closes, probably the second quarter of 2004.
