Yesterday, Las Vegas-based casino operator Red Rock Resorts, Inc. (RRR) announced that it has entered into an agreement with Station Casinos LLC for the acquisition of the Palms Casino Resort located in Las Vegas, Nevada for $312.5 million.
Marc Falcone, Red Rock Resorts’ executive vice president, chief financial officer, and treasurer, said, “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,” according to Business Wire. Falcone went on to say, “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. With our experience owning and operating other hybrid offerings in Las Vegas, it is a compelling strategic addition to our portfolio of properties and we look forward to welcoming the Palms’ team members to our Company.”
During the first year of ownership by the Company, it estimates that $35 million in earnings before interest, taxes, depreciatio and amortization (EBITDA) will be generated by the Palms. It also expects that within the first full year of operations it will be free cash flow positive and accretive to earnings per share. The close of the sale is expected during the third quarter of this year.
On April 26, the Company which operates property’s such as Red Rock, Palace Station, and Green Valley Ranch, went public and raised $531.4 million. Priced at $19.50, the Company offered 27.5 million shares at the middle of its previously indicated range of $18 to $21. MGM Growth Properties was the first of the two gaming companies to go public this year and in its initial public offering raised $1.05 billion.
The Palms’ 95,000 square-foot casino has approximately 1,250 slot machines, 48 table games, a race and sportsbook, and a two-tower hotel with about 710 hotel rooms, including 19 penthouses and 85 suites. The facility also has 15 restaurants and 60,000 square-feet of convention and meeting space, as well as many other amenities.