Desert Passage sold

Tuesday, Dec. 23, 2003 | 11:02 a.m.

Desert Passage, the Arabian-themed shopping mall attached to the Aladdin hotel-casino on the Las Vegas Strip, was sold to a New York-based real estate partnership for $240.5 million.

Trizec Properties Inc., the nation's second-largest real estate investment trust, on Monday announced the sale of the 445,000-square-foot retail and entertainment property to Boulevard Invest LLC, an investment partnership formed by David Edelstein of Sutton East Corp. and RFR Holding principals Aby Rosen and Michael Fuchs.

The new owners gave no details about plans to retheme the property, but Las Vegas real estate experts believe the Boulevard Invest partners will work closely with the new owners of the Aladdin.

The Aladdin is in the process of being sold out of bankruptcy to a group headed by Robert Earl, chairman and chief executive of Orlando, Fla.-based Planet Hollywood International Inc.

Earl intends to convert the 2,587-room property to a Planet Hollywood-branded hotel-casino. He is backed by financier Bay Harbour Management LC, New York, and hotel operator Starwood Hotels and Resorts Worldwide Inc., White Plains, N.Y.

The sale of Desert Passage has been on Trizec's radar screen since August, when several suitors expressed interested in an acquisition. Trade publication Real Estate Alert first reported Trizec officials were close to a deal in September, but the company, which wants to focus on owning office buildings in larger U.S. markets, declined comment at that time.

Desert Passage is the eighth-largest shopping mall in the Las Vegas Valley and the fourth-largest among Strip retail centers. It has more than 140 stores and eight restaurants. Some retailers, though, have left the mall for other Strip sites in the past year because of disappointing traffic counts.

The new owners have contracted with Chicago-based Urban Retail Properties Co. to manage the center. Urban Retail Properties, which manages more than 35 million square feet of properties in the United States (including The Galleria in Houston and the Century City Shopping Center in Los Angeles), will work with Robert K. Futterman & Associates as leasing agents.

For Chicago-based Trizec, selling the mall will reduce debt by $178 million, the company said in a statement. It will use some of the proceeds to buy real estate in regions where it owns more buildings. Desert Passage was the only Las Vegas property owned by Trizec.

"This will provide us with additional flexibility to take advantage of opportunities that should emerge as the economy and the office property markets recover," Trizec Chief Executive Tim Callahan said in the statement.