Regent performance may be improving — timeshare possibility mentioned

David Strow

Wednesday, April 25, 2001 | 10:48 a.m.

The Regent Las Vegas' financial performance is improving as interest in the bankrupt Summerlin property heats up, according to court documents filed Tuesday.

From Jan. 1 to April 8, the Regent posted negative operating cash flow of $2.27 million, said an affidavit filed by Regent Chief Restructuring Officer Lanis O'Steen. While this is not the kind of performance that will ensure the Regent's long-term stability, it is $3.7 million above the projections that were originally presented to the bankruptcy court.

As a result of the Regent's stronger financial performance, the property has borrowed $10 million of its $20 million bankruptcy credit line to date, $4 million less than expected. That has positive implications for the property, as the credit line provides the cash needed to keep the Regent open until the property can be sold or refinanced. It also means a higher price could be commanded for the property, O'Steen said.

"It's getting very close to the point where it's paying all of its operating expenses," O'Steen said. "(Improved cash flow) doesn't make us nearly as desperate to get something done today, and gives us a little latitude by having results that don't chew into that credit line. That buys us some time to do a better job of marketing and shopping the property to do a better deal."

The March 26 to April 8 period was a particularly good one for the resort -- over those two weeks, the Regent reported positive cash flow of $184,000, compared to projected negative cash flow of $1.6 million.

"We've been able to generate quite a bit of local interest in the property," O'Steen said. "A lot of locals are coming in and rediscovering the Regent, and when they come here, they appreciate the amenities and elegance of the hotel and the whole property. There's quite a bit of difference in terms of day-to-day locals traffic than in the past."

Hotel operations are also showing significant improvement, O'Steen said. In March, the property's 461 hotel rooms averaged 91.4 percent occupancy, up from occupancy in the 60 to 70 percent range in the first quarter of 2000.

"We're getting a considerable amount of traffic from the Southern California market," O'Steen said. "(High occupancy) is one reason we're over projections."

Because of strong business, O'Steen said the resort has been hiring back many of the 280 workers laid off last year, though many are being brought back only on a part time basis. O'Steen estimated the Regent's workforce is within 100 of its pre-layoff levels.

Meanwhile, the Regent's attorneys are now estimating the first bidder for the property will be identified within 30 days.

The first bidder in a bankruptcy sale is known as the "stalking horse" bidder. Rival bidders can attempt to outbid the stalking horse in an auction.

As of April 20 four parties have submitted initial written proposals to acquire the Regent, and 43 parties have signed confidentiality agreements, according to an affidavit filed by Steven Strom, the Regent's investment banker.

Strom said he has held conference calls or meetings with each of the four parties that have submitted initial proposals. Strom also said he's had discussions with one buyer's financing source and attorneys.

"(The marketing process) was a little slower (than expected) over the last three weeks, but it's beginning to pick up quite a bit," O'Steen said. "We feel pretty comfortable we're progressing according to plan."

Though the property is quite attractive, it has suffered from improper marketing and a questionable location, said David Atwell, a long-time Las Vegas hotel-casino broker. Moreover, it's "overimproved," meaning that too much capital was spent on its development in relation to its market.

"Las Vegas is a peculiar and tough market, and these kind of mistakes can be lethal to a new property," Atwell said.

Still, Atwell believes the property could work with the right kind of strategy -- and said he's currently working on an offer himself. He declined to identify on whose behalf he was working.

"The right buyer with a solid plan, perhaps with a timeshare component, and the ability to carry it out, could make the Regent a success," Atwell said. "We will know fairly soon."