Boyd's Best Bet: Ditch the Casino, Sell the Land?

The present value of that project, using a 10% annual discount rate and a four-year period until opening, equates to $3.4 billion, according to estimates calculated by TheStreet.com.

If Boyd could sell Echelon's 87 acres of land at $30 million an acre (matching recent deal prices for Las Vegas land), then the entire parcel could be sold for $2.6 billion today.

So if management can hit a 15% return, it makes sense for Boyd to develop the project. But that's not a risk-free proposition.

An initial return in the midteen range may be unrealistic. Wynn Las Vegas, the last major resort to open in Vegas, earned a 10% return in its first year of operation. Using a 10% return on cost, Echelon would post EBITDA of $330 million. Using the same multiple and discount rate, the project would be worth $2.3 billion today -- below the value of the land.

Ever-Rising Prices

While Vegas real estate prices have been soaring in recent years, one deal in particular has caught the eyes of industry watchers.

Elad Group, owner of the Plaza Hotel in New York City, recently purchased the New Frontier site, which sits across the street from Echelon, for $1.2 billion, or $35 million an acre. The group plans to demolish the site and build a luxury resort.

« Previous Page

1 2 3 4 5

Next Page »