Neon guitars and concert venue "The Joint," known for being a pop icon in Las Vegas, have been sold to Morgan's Hotel Group in New York for $770 million, Hard Rock founder Peter Morton said on Thursday.
The sale, pending regulatory approval and other conditions, planned a 647-room hotel on 17 acres on Paradise Road and Harmon Avenue, as well as a 30,000-square-foot casino, hotel condo expansion and related intellectual property.
Morton said he would receive about 95% of the proceeds from the sale in net income and had no plans to develop games or any other properties in Las Vegas.
"I'm taking chips off the table," Morton said at his Los Angeles office. "Vegas is a great town. There are great people working in hotels, and the community has been phenomenal. We tried our own little ways to contribute. We brought rock and roll to town."
The Joint made Las Vegas a popular music scene destination with performances such as The Rolling Stones, Bob Dylan, Neil Young, Coldplay, Nora Jones, David Bowie, Elvis Costello, and Nine Inch Nails.
Morton spent $80 million building Hard Rock in 1995 and expanded the site with a beach club and swimming pool that became one of the most popular party venues in town in 1999. It was named one of the top 10 swimming pools in the world by the Travel Channel. Other hard rock attractions include a Body English nightclub, a Novu restaurant, and an 8,000-square-foot spa and fitness center.
"Hard Rock is already an amazing landmark and we are excited to be able to acquire a highly scalable property," said Edward Scheetz, Morgans' president and chief executive officer, in a statement. "Las Vegas is the core of our growth strategy, as it is the largest hotel market in the United States. This transaction provides us with an immediate and tangible entry into this market."
He said Hard Rock will complement Morgan's existing collection of hotel brands, including Morgans in New York, Royalton, Hudson, Delano and The Shore Club in Miami, Mondrian in Los Angeles and Scottsdale in Arizona, Clift in San Francisco, Sanderson in London and St Martins Lane.
"My assumption is that they're buying a hard rock brand because they've recently gone public and they need recognition," said Jim Stewart of Las Vegas-based Sentra Properties, a joint venture partner of the related company, in the Las Ramblas project about Harmon. "Strategically, their growth mechanism is they're buying a brand, so that's a logical move for Morgan's."
Morgans, which closed Thursday at $17.95 per share, down 7 cents on the Nasdaq National Market, is known as a boutique hotel operator targeting a young population.
"The hotel, along with Delano and Mondrian brands, will allow our brand to dominate the Las Vegas market at various price points by offering synonymous styles, innovations and services," Shetz said.
Founded by Studio 54's Ian Schrager, Morgans has agreed with Boyd Gaming to build a 600-room Delano and 1,000-room Mondrian hotel, planned for the current Stardust on the Strip site.
"We have high respect for their company and we're very excited for them to be involved in developing Eclones," said Rob Stillwell, a spokesman for Boyd. "They're coming into Las Vegas in a big way."
Two Wall Street analysts, who did not comment on the record because of the conflict, said Morgan had wanted to enter the Las Vegas market for some time and that Hard Rock was a good fit for the way the company operates. That was just a matter of offering terms, especially for the price, as Morton wanted at least $750 million.
Game analyst at Lehman Bros. Jane Pedray said Hard Rock Hotels reported $45 million in revenue last year before interest, depreciation, taxes and amortization, but no one knows how much excess costs could be due to its private holdings.
She said the hotel was selling somewhere between nine and 12 times the EBIDTA multiple, depending on what she thought of the value of 24 acres. She had numbers between $10 million and $15 million per acre.
"We don't know if they're just connected to the hotel, or if they can use the name Hard Rock for other hotels," she said. "In a big plan, rather than buying a strip property and collapsing it, it's not a lot of money. You're not talking about billions of dollars. And it still fits their trendy market niche."
When it comes to selling Hard Rock, the part that interests Pedrayra the most is the game license. Morgan will have to go through a licensing process or contract with the casino operator, maybe Boyd.
"It is unusual to give the advantage of a gaming license," she said.
Morton co-founded the Hard Rock brand in 1971 and sold his own Hard Rock cafe chain to Rank Group in 1996 for $410 million.
"I've been a part of Hard Rock for 35 years," Morton said. "I think this is a good time to sell. There's a lot of liquidity. You know, the market is at its peak right now and I've got a great offer. I felt like there was a point in my life where I wanted to do more and reevaluate things. I want to do other things."
Adam Frank, principal of Edge Resort, which is developing a Las Vegas hotel in Harmon and Koval Lane, said he had heard Morgan appear as a possible suitor to Hard Rock, but not one of the most frequently heard names. 에볼루션 바카라사이트
