By Jeff Pope

Thu, Sep 4, 2008 (3:59 p.m.)

The instinct for timing drives many decisions in the business world.

As Station Casinos Inc. moves closer to the Nov. 11 grand opening of Aliante Station hotel-casino in North Las Vegas, the company says the time is not yet right to break ground on its long-awaited Durango Station.

However, the 70-acre site on the southwest corner of Durango Drive and the Las Vegas Beltway remains on the company’s short list to develop, said company spokeswoman Lori Nelson. Just don’t expect to see shovels in the ground until the gaming market and economic conditions improve.

“The plans are done, they are ready to go and it will really be contingent on timing based on the economic conditions,” she said. “It’s the economy, it’s fuel prices, it’s bond ratings. There’s a lot of factors that go into that.”

The tentative plan, though, is to break ground sometime in 2009 and open in 2011, Nelson said.

Station is at risk of defaulting on loans and running out of cash, hurt by reduced consumer spending and rising commodity prices, according to a recent report from debt rating agency Moody’s Investors Service.

The research firm cut the liquidity ranking of Station two notches to the lowest level after saying the Las Vegas-based company may break its loan agreements.

Moody’s also downgraded nearly $4 billion of Station Casinos’ debt in July, citing the drop in Las Vegas gaming revenue during the past few months.

Station reported second quarter revenue fell 7 percent this year to $339.1 million after a 5-percent decline in the first quarter. Second quarter cash flow of $128.4 million was down 11 percent from the year-ago quarter.

Station went private last November through a $5.4 billion buyout led by members of the Fertitta family, which founded the company.

The credit downgrades mean Moody’s views Station as having more risk than before, so the company may have to pay higher interest rates — similar to a person with a low credit score.

But that likely won’t slow the company’s development plans as much as the credit crunch, housing crises and general economic slowdown, said Bill Lerner, a local gaming securities analyst with Deutsche Bank.

“They will be judicious about the pace of their development,” he said. “More of the increase in cost of capital for a company like Station has to do with the tight credit market, not what some kid in New York thinks about their risk profile.”

Lerner also disagreed with Moody’s assertion that Station could fail to meet its debt obligations.

Durango Station’s timetable likely won’t depend on how well Aliante Station opens, Lerner said. The company’s history of long-term growth and the steady stream of new residents expected in the coming years should keep Durango on the company’s short list.

“Aliante’s opening wouldn’t be any different in a stronger environment than it will be in the current environment. At the same time, certainly they recognize it’s a different part of the locals market for them,” he said. “These guys build stuff for the long haul to capture the secular (long-term) benefit of the population migration.”

When Durango Station is under way, the first phase will include 201 hotel rooms, meeting and banquet space, a pool, food court, entertainment lounge, arcade, a Regal Cinemas theater and gaming, slots, tables, a poker room and race and sports book.

It will include 190,000 square feet of retail in a two-story open air mall similar to The District in Henderson with a mix of boutique retailers, office space and restaurants.

The company hasn’t announced the price tag for Durango Station since construction costs likely would increase before the project is under way, Nelson said.

Although less than 10 miles from Station Casino’s Red Rock Casino Resort, Durango Station will siphon little business from its other properties, Nelson said.

Affiliates of the Greenspun family — publisher of the Home News — are partners with Station in Green Valley Ranch Resort and Aliante Station.

Jeff Pope can be reached at 990-2688 or jeff.pope@hbcpub.com.