Greyflannel (< 20)

Who Benefits from the Collapse of the Strip? Banks, Buyers or will it be Someone Else?

December 29, 2008 – Comments (0) | RELATED TICKERS: MGM , LVS , STN

The recent sale of Treasure Island, TI, by MGM Mirage (MGM), the troubled and capital constrained Las Vegas Sands (LVS), teetering Stations Casinos (STN) and Boyd Gaming (BYD) all point to large portions of the strip, and Las Vegas properties in general, going on sale or more likely bankrupt. 

Who will benefit is the underlying question and who will have the capital to execute?

The banks that underwrote large tranches of debt to finance the consolidation of the strip and the institutions that bought the debt will certainly be first in line to negotiate during any re-organizations.  To be fair, however, most aren’t in the casino operating business, and the lack of available capital will be to the detriment of sellers and buyers. 

Wells Fargo (WFC) and Bank of America (BAC), among others, have both been large and active lenders to the strip.  Will the banks have the task of operating a portfolio of casino properties?  Will they hold onto to the properties long enough to realize what some Vegas operators view as an opportunity of a lifetime to buy properties on the strip?