Desert Passage owner talking to suitors

Wednesday, Aug. 6, 2003 | 10:31 a.m.

The owner of the Desert Passage mall at the Aladdin said Tuesday it is talking with several interested parties about buying the property or entering into a partnership to run the mall, though the company did not name any suitors.

During an earnings call to discuss second-quarter results, Trizec Properties Inc. executives said they are still working through issues related to the Aladdin bankruptcy and are not yet prepared to cut any deals. A bankruptcy court judge in June approved the sale of the resort to an investment group headed by Planet Hollywood restaurant chain founder Robert Earl. But the property hasn't yet emerged from bankruptcy.

One of the nation's largest real estate investment trusts, Chicago-based Trizec Properties said since 2001 it has wanted to sell the high-end retail center along with other non-core assets and focus on investing in office buildings.

"We've reached a tentative agreement so far on several issues associated with the bankruptcy that I think are positive for the potential buyers, but these agreements are still subject to court approval so it's hard to get into great detail about them," company Chief Executive Officer Timothy Callahan said Tuesday.

Under the terms of the sale agreement, Earl's group would assume about $510 million in debt and other liabilities.

Earl's group expects to invest $90 million over three years to upgrade the property in connection with its transformation into a Planet Hollywood-themed resort. The investment "should have a positive impact on traffic" at the mall, Callahan said.

Sales at Desert Passage are up 10 percent from January through June, while sales over the last 12 months are up more than 12 percent.

Occupancy at the mall increased to 77.2 percent in June from 71.6 percent at the year's beginning.

Positive year-to-date figures and progress on the Aladdin bankruptcy deal have accelerated conversations with potential investors, though a deal isn't likely until 2004, Callahan said.