Tuesday, March 8, 2005 | 11:07 a.m.
Reflecting the skyrocketing value of land on the Las Vegas Strip and the high-priced neighboring resorts he'll be competing with, the owner of the New Frontier plans to spend $1.3 billion or more to build a new hotel and casino on the site.
Billionaire Phil Ruffin is getting closer to redeveloping his aging hotel, the Wichita, Kan.-based developer said Monday.
He's lined up financing for the project and is narrowing down plans for the new hotel, Ruffin said.
"We're going to do this ourselves, with no partners," Ruffin said. "We have the money lined up."
Ruffin said the project's financing will be a combination of bank debt and higher-cost bond debt.
"About half and half of each," Ruffin said
He plans a 3,000-room hotel, all suites, and wants to spend about twice as much as he'd originally planned to sink into a new hotel.
Because of the increasing value of Strip real estate and the top-notch resorts he'll be competing with, including the $2.7 billion Wynn Las Vegas directly across Las Vegas Boulevard, Ruffin said it no longer made sense to develop the kind of casino he'd originally planned when he bought the property in 1998 for $167 million.
Ruffin announced plans in 2000 to build a $700 million San Francisco-themed resort on the casino site. Two years later a tough economy and high interest rates prevented him from borrowing the money necessary to build a new resort, and he flirted with a number of hotel and casino operators about joining him in a joint venture to redevelop the site with a new hotel and casino.
But as the economy improved and Las Vegas casino results rebounded, Ruffin realized that his plans had to change too.
"It has to be high-end. It has to be luxury," he said.
He noted his joint venture with real-estate developer Donald Trump to develop a twin-tower high-rise condominium project on the site next to the Fashion Show mall.
"You got Trump on the site, you got Wynn, you got the Venetian, and (Venetian owner Sheldon) Adelson's new resort, you have to build something very nice," Ruffin said. "We'll spend $1.3 billion, and maybe even more."
He declined to say when he might close the New Frontier to begin construction on the new resort, as yet unnamed.
Jefferies casino debt analyst Larry Klatzkin said all-suite, more upscale projects are becoming the norm on the Strip.
"He's building what will be competitive," Klatzkin said of Ruffin's plan. "That's what everyone else is building. It fits in."
About Ruffin's change from a $700 million property to one costing almost double that, Klatzkin wasn't surprised.
"That's in the realm of what things are going for now," he said.
Another Wall Street analyst who declined to be named said the days of the half-billion-dollar Strip resort appear to be over.
"Most of the new supply on the Strip has been high-end," the analyst said. "That's the hot end of the market. In the post-Wynn era you'll have to go north of a billion. Because of land valuations, Ruffin has to go large-scale, high-end to make the project pencil out."
Ruffin said he's finalizing details on the sale of his Bahamas resorts but noted that he's making the sale so that he can focus on the New Frontier redevelopment, not because he needs the cash for the new project.
He declined to name the buyer and the sales price for the Wyndham Nassau and the Nassau Beach hotel, but he said that the buyer is not Baha Mar Development as has been reported elsewhere.
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