Thursday, June 5, 2003 | 11:02 a.m.
Nevada Power Co. expects to fetch about $25 million in an Aug. 12 auction of 22 acres along Flamingo Road.
The land, which includes leases with nine current tenants including several high-profile restaurants, will be divided into six units on the north side of Flamingo between Koval Lane and Maryland Parkway.
Conditions of the sale will require the buyer, or buyers, to honor existing leases and preserve an easement for Nevada Power's transmission lines that are currently on the property, said John Zelling, director of land services for Nevada Power.
The move to sell the land, most of which was acquired in the 1920s and 1930s, was driven by recent interest in the property, he said.
"It's an opportunity to generate cash from an asset that is not a part of our core business," Zelling said.
The sale was not motivated by Nevada Power's recent financial struggles, he said.
Carlton Geer, director of the Global Gaming Group for CB Richard Ellis, said Nevada Power should have little trouble finding buyers.
"It's an absolutely terrific opportunity for someone to come in and buy leased property that has strong tenants that can be depended on for revenue," he said, emphasizing that the quality of the leases will determine the final sale price.
Nevada Power declined to give details of the existing leases until the auction process is formally under way. That will begin June 12, when Nevada Power launches a website -- property.nevadapower.com -- outlining the due diligence process.
Some of the current businesses along that stretch of land are several popular restaurants, such as Cozymel's, Roy's and Morton's. A variety of other neighboring businesses include a Walgreens Drug Store, an animal hospital, a pawn shop and several fast food restaurants.
In addition to the current leaseholders, the 1.5-mile strip of land includes three vacant lots. Not included in the sale are two Nevada Power substations located along Flamingo.
Given the market for such properties, Nevada Power's estimates for the sale appear realistic, Geer said.
"I think it will be a good auction," he said. "Twenty five million, that sounds like a reasonable number to me."
Jeremy Aguero, principal with the local research firm Applied Analysis, said the land has its pluses and minuses.
"As far as long-term development strategy, it's got traffic levels better than anyplace in the valley," he said, adding that "some of the configurations in that area have been difficult."
Those difficulties include access issues and the obstacles created by the transmission lines, he said. With that, Aguero said, some of the businesses in that area have struggled.
Zelling said the proceeds of the sale would ultimately benefit Nevada Power's customers in a future general rate case before the state Public Utilities Commission. Returns from the sale would offset cost recoveries the utility would request for expenses related to business costs, such as construction or maintenance of its generation or transmission facilities.
The August event will not be the first land sale for Nevada Power this year.
In January, the Las Vegas utility sold 2.5 acres next to the Barbary Coast hotel-casino to Coast Casinos Inc. for $20.7 million. The land had previously been leased to Coast Casinos and used as a parking lot.
"I would say this is truly a continuation of selling land we don't need," he said.
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