Michael Cahill, president of Denver-based hotel and casino consulting firm HREC (Hospitality Real Estate Counselors), said casinos are commanding significant premiums as the gaming industry looks for new growth when new development opportunities are scarce. He said the going rate for a casino acquisition in today's market is up to 50 percent more than it was a decade ago. A casino now will typically sell seven to nine times cash flow (before depreciation, amortization, taxes and interest), versus six to seven times 10 years ago.
Cahill also said Fort Mitchell-based Columbia Sussex would be a logical suitor, noting the company's familiarity with the Midwest and recent flurry of acquisitions - most recently the pending $2.8 billion takeover of Aztar Corp.
"If I were a broker for this casino, my first call would be to Columbia Sussex," he said, adding other gaming companies without a local presence might also be interested.
Officials at Columbia Sussex declined to comment on Tuesday.
Please note that this is net cash flow not gaming revenue as reported by the Indiana Gaming Commission. Grand Victoria is a privately owned company so profit margins are not readily available. However, Argosy in nearby Lawrenceburg operate on a 7.28% profit margin. The Indiana gaming commission reports that for fiscal year 2003, H. Group Holding Inc. had total assets of $5.3 billion, which produced sales of $2.78 billion. Grand Victoria represented about two percent of total assets of H. Group Holding. Therefore the total sales may be about $55,600,000 annually. If you multiply that by 7.28% then profits may be in the $15 to $25 Million range. This would create a sales price of about to $180 to $235 Million range. (This again is all pure conjecture based on available information).
Remember as part of MGM/Mandalay merger last year, Hyatt Gaming Management agreed
to become the manager of the Grand Victoria riverboat in Elgin, Illinois. They hold a 50% interest in that venture.
According to a report filed with the gaming commission in 2004, Grand Victoria in Rising Sun is 80 percent owned by Indiana RBG LP, a subsidiary of H. Group Holding Inc., and 20 percent owned by RSR LLC. H. Group Holding, Inc. is a private holding company owned indirectly by trusts for the benefit of the secretive but wealthy Pritzker family of Chicago. The primary businesses of H. Group Holding Inc. are the operation and ownership of Hyatt Hotels in North America, the management of retirement facilities, the leasing of equipment including personal computers, computer workstations, temporary storage tanks and related products.
No comments:
Post a Comment