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Red Rock Resorts Buys Palms for $312.5M

By Chuckmonster on Tuesday, 10th May 2016 3:29pm
  » filed under Mergers & Acquisitions  comments: 12

   

Red Rock Resorts (fresh off an IPO that changed their name from Stations Casinos) confirmed rumors today that they have purchased The Plams for $312M bucks. Here's the form 8K they filed immediately after markets closed today.

Bloomberg reported in March that co-owners Leonard Green & Associates and Texas Pacific Group had contracted with Macquarie Group to sell the property.

Sending champagne dreams to Mr. Richard Munchkin of Gambling With an Edge podcast, he tweeted about rumors of a pending sale on Sunday.








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Comments & Discussion:

So lots of activity in the locals market lately.....Crown sells the Cannerys to Boyd, Station sells Aliante to Boyd, and now Station buys the Palms.

Stations lost Aliante to creditors in the bankruptcy several years back. Interestingly enough, two of those creditors were TPG Capital and Apollo Global Management.

Red Rock Resorts got a decent deal on The Palms when you consider that Boyd is paying $380 million for Aliante. The property does fit into the more upscale market the company shifted to with properties like Green Valley Ranch and Red Rock Resort.

Are the Fertittas still in charge of RRS? Reports also that the brothers are interested in selling UFC for several billion.

Anyone have thoughts on the purchase price? It's about 18 percent of what Cosmo went for in 2014, though I know that's comparing apples to oranges

The Fertittas are the still running things at Red Rock Resorts. As for the UFC rumors, Dana White is denying the rumors.

@anawas the price seems a little low to me.

I really hope Red Rock Resorts will be able to turn around that property, I was last year for dinner at Nine and was shocked how dead it was for a Friday night. When gambling is going bad for me I still love heading over there to catch at movie and some Red Vines at the Brenden Theatres.

The Fantasy Tower alone cost 600 million. This is a shockingly low bargain basement price.

The price is interesting. An 8.8 multiple on EBITDA actually seems to hit the low end of a large, established business like the Palms. It may seem like a considerable deal over the Aliante, but Boyd is expecting about $40M in EBITDA in a few years, which puts Aliante's valuation at about a 9.5 multiple. Similarly, RR is confident that the Palms will return about $34M in earnings the first year after the acquisition. This may help provide a good starting point when trying to value other potential casino mergers. About a 9 - 11 multiple seems to be the standard right now.

I kind of like the Palms. But I agree with @Ricogreen, the place is rather dead. Even for a busy weekend like March Madness, they didn't have a lot going on. My choice is to always lower drink prices, but nobody ever listens to me.

The Palms is still trying to get by on it's former popularity, but that generation has since moved on to other resorts in Las Vegas. A lot of the swagger the Palms had back in the day was because of the Maloof brothers and how they were presenting the place to the world.

@vespajet And now the world has moved on. Literally as The Real World is currently airing it's latest season from the Gold Spike!



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