Alon management exploring options after loss of backer

The management team of Alon, the 1,100-room resort planned for the nearly 35-acre property on the Strip across from the Wynn, said today work will continue on the project despite the loss of a major backer.

This morning, Australian company Crown Resorts announced it has suspended work on Alon and may sell outright its investment in the project. In response to that news, Alon management released a statement saying it will “continue to explore all of its options to advance the project and optimize the value for its stakeholders."

In the release addressing Crown’s departure, Alon management called the site the most compelling opportunity on the Strip and said it had “invested two years in the program planning, design, development, pre‐construction and entitlement process,” and that it considers the project “shovel‐ready.”

Crown Resorts announced in August 2014 it had purchased the site and entered into an agreement with the co‐chairman and CEO of what would be named Alon, Andrew Pascal.

At the time, Crown said the project, formerly the home of the Frontier, was “the ideal opportunity — with a great local partner in Andrew, a leading financial investor in Oaktree, and the perfect piece of property."

In that announcement, Crown said it expected to break ground in the latter part of 2015. It never happened.

For Alon to continue, it would now need to find a partner to purchase the land in addition to completing the financing to get it built.

The project sits on an important piece of property

Mike Mixer, executive managing director of Colliers International, calls it “one of the most valuable properties in all of Las Vegas.”

But despite that value, if Alon management can’t get the resort built, it’s unlikely anyone in the near future will build another, one gaming analyst says,

“Crown could try to monetize and sell the land to another operator,” said Chris Jones, senior gaming, lodging and leisure research analyst with the Buckingham Research Group.

“But I don’t think there’s another operator that wants to buy that property from a greenfield (starting-from-scratch) perspective.”

Jones said that Resorts World, the other resort being developed on the Strip just north of Alon, and Wynn Resorts would both have benefited from the success of Alon.

“If I was Genting (the developers of Resorts World), I wouldn’t be happy about this,” Jones said. “It leaves a giant gaping hole of sand between them and other properties. And while competitive pressures are what they are, having more development on that end of the Strip would probably be positive for Wynn. They’re bookended on the Strip and further development would help get better traffic.”

Others are not so sure.

“Alon not moving forward would be a good thing for the market,” said Alex Bumazhny, senior director at FitchRatings. “It’s still recovering from the recession and absorbing the glut of new capacity from six to 10 years ago. This is especially true if Resorts World Las Vegas moves forward.”