Thursday, July 14, 2005 | 11:15 a.m.
Owners of the Stratosphere are considering adding new rooms and a convention center to the 2,444-room resort just north of the Las Vegas Strip.
Richard Brown, president and chief executive for American Real Estate Partners LP, the parent company that owns the Stratosphere, told members of the state Gaming Control Board Wednesday that improved revenue and cash flow at the property have led executives to begin a feasibility study into expansion.
Brown said in an interview after his appearance before the board that the study is in its early stages and there aren't any early indications of how many rooms could be added or how large a convention center would be.
"I think we're like everybody else in town in that we're considering what we can do next," Brown said. "We've made a lot of improvements in the last five years, grown our EBITDA (earnings before interest, tax, depreciation and amortization) dramatically and turned around some distressed properties. It's time we looked at what else we can do."
Brown said he hopes a determination could be made within 10 weeks as to what expansion could occur. He did not speculate on how large any expansion would be or how much money the company would be willing to spend.
Brown told regulators that 2004 was a banner year for the company, which also owns two Arizona Charlies' locals properties, and that year-over-year cash flow had improved by 60 percent. He said so far in 2005, cash flow at the three properties is up another 22 percent.
He also said revenue was up 15 percent and the average daily room rate also had climbed.
In the company's most recent earnings statement filed with the Securities and Exchange Commission, the company reported net income of $10.1 million on revenue of $82.8 million for the quarter ended March 31. That compares with net income of $6.2 million on revenue of $75 million for the same period a year earlier.
Brown said the Stratosphere, like many Strip properties, sees more revenue coming from other attractions than gaming, with about 62 percent of the Stratosphere's revenue coming from amenities other than the casino floor.
Brown and Chief Financial Officer Denise Barton appeared before regulators to be licensed as key executives for a new holding company under the umbrella of American Casino & Entertainment Properties LLC and its Mount Kisco, N.Y.-based parent, American Real Estate Partners LP, controlled by entrepreneur Carl Icahn.
The company formed AREP Gaming LLC to manage the company's casino interests in Nevada as well as the Sands in Atlantic City.
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