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       This page was updated 7/3/07
   

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Riviera on the Block - Bidding War Heats-up

5/21/07    For the last few months, Bruce Eichner (developer of the Cosmopolitan) and Dune Capital Management have been making escalating bids for Riviera Holdings Corp. The first bids weren't high enough to raise an eyebrow, then on May 10th 2007, Eichner topped a rival bid of $27/share from Riviera Acquisitions (which controls 20% of Rivera's stock) and offered $30 a share.

Eichner is CEO of 3700 Associates (the developers of the Cosmopolitan).

On May 17th Riviera Acquisition upped their bid to $34 per share (which is equivalent to $423.6 million) for the 26.36 acres, or about $16 million per acre. 

Since the New Frontier just sold for an unprecedented $33 million per acre, we expect to see this war continue for a while.

 


So, what's the  Riviera really worth?
by Mark Adams of vegastodayandtomorrow.com
7/3/07

Now, I'm not claiming to be an expert concerning Las Vegas land values, yet I feel I know enough to make an assessment now and then. The Riviera is most likely worth somewhere between $26 - 30 million per acre. I base this estimate on the following facts:

LOCATION - LOCATION - LOCATION
The north strip is full of high-end projects;
MGM MIRAGE is planning to develop 40 of the undeveloped acres at the north end of the strip with a project similar to CityCenter. The Sahara has new owners who have pending plans. Crown Las Vegas, a super-tall luxury resort, is planned for the old Wet & Wild site. Fontainebleau, Echelon and Encore are under construction and ELAD is planning the $6-8 billion Plaza Las Vegas on the site of the New Frontier. The Riviera is in the middle of all this chic and pricy north-strip development.

The Rivera's 26.4-acre property is configured with two major frontages. First, of course, is the 664-feet along the strip. Secondly, the 114 feet along Paradise Road. With a little land assembling (adding three small parcels, totaling just over 2 acres), the Paradise frontage could be stretched to 500 feet (see map, right).

With the Las Vegas Convention Center expanding, the Hilton talking about developing their front yard and Turnberry Place as a neighbor, the Riviera is again in the middle of a second burgeoning area. The "back" of the Riviera property could become the front of a second hotel and convention center that would be very convenient as overflow space for the larger shows like CES.

The Riviera property is just short of 1/4 mile long. This would allow development of a major new resort along the strip, a residential element in the center and the aforementioned second hotel and convention center on the east end fronting Paradise Rd. (see my sketch, right).

So, with all these components, the price for the Riviera land should be more than the average $20-22 million/acre. Note: the $34 million/acre that the New Frontier land brought, was an "out of the ordinary" deal and should not drive the average price/acre to those levels. 
 




Click map to enlarge


Land use study by Mark Adams
Click image to enlarge

 
 
 
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