Red Rock Resorts, Inc. (NASDAQ:RRR) said today its Station Casinos social unit is merchandising the Palms Casino Resort inwards Las Vegas. The vendee for $650 billion in cash is the San Manuel Band of Mission Indians, termination roughly a twelvemonth of venture regarding the fate of the currently shuttered venue.

Rumors well-nigh the transaction involving San Manuel — manipulator of unity of California’s largest Native American casinos — were originally reported by Vital Vegas lowest week.

However, Palms’ fate has hung inward the equilibrise for nearly a year. Station Casinos filed plans with the Sagebrush State Gaming Control Board (NGCB) to preserve the integrated resort and three other Las Vegas-area properties shuttered through and through June 30, 2021.

Fiesta Henderson, Fiesta Rancho, and Texas Station weren’t mentioned in a statement announcing the Palms transaction. The trinity of Station venues is noneffervescent closed.

Underscoring the unsmooth environs sellers of gaming assets face inward the viewing of the coronavirus, Red John Rock is taking a loss on the sale. It paid $312.5 zillion to the Maloof fellowship to gain the locus almost exactly pentad years ago but sunk another $690 one thousand thousand into sprucing it up.

A statement issued past Las Vegas-based Red River John Rock Resorts doesn’t say when the transaction will close.

‘Like Buying a Yacht’

In terms of pricing, it’s a unspoiled time to live a buyer of gaming properties, as highlighted by at least ane recent Strip transaction. However, some existent estate industry insiders with intimate knowledge of the gaming blank say buyers inward this surroundings should cognise what they’re getting into.

Buying a Vegas casino inward this securities industry is similar purchasing a yacht,” said Jesse James Harris, senior managing theater director at Helmsley Spear, in an interview. “You must follow willing to waste-yard 10 percent of its be in the sea every yr and wait for the turn.”

The “turn” he’s referring to is the getting even of formula stage business to the largest US gaming center. This is something some analysts don’t see forthcoming pre-pandemic levels until 2023.

Red John Rock Has Options for Palms Cash

Over the course of instruction of 2020, venture most the fate of Palms repeatedly popped, with Red River Rock executives consistently refuting that the locale was upward for sale. Obviously, at that place was a exchange of heart, as highlighted past today’s announcement.

While the $650 jillion cut-rate sale terms occurs at a lower place Palms’ volume value, indicating San Manuel is getting a unspoilt deal, in that respect is some potential upside for Red John Rock investors in this deal.

As Macquarie analyst Tchad Beynon points come out inwards a take down to clients today, the operator has legion(p) options for proceeds from the Palms transaction. It could revisit the Durango project, something it touted prior to the Palms purchase in 2016, and the fellowship could trim down debt, according to the analyst.

Beynon adds Red John Rock could follow unity of the foremost gaming companies to reinstate its dividend. Operators gelded and suspended payouts at the tallness of the pandemic to conserves cash.

He reiterates an “outperform” rating and a $36 damage direct on Red River Rock stock.

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