Red Rock buoyant as Deutsche Bank exits stage

Red Rock buoyant as Deutsche Bank exits stage

Friday, November 11, 2016 Posted by Andy McCarron
Las Vegas locals operator continues upward drive

Casino group Red Rock Resorts managed its 14th consecutive quarter of revenue growth, and its second since it floated in the spring, according to its third-quarter results statement that was issued a matter of days after major shareholder Deutsche Bank confirmed its was selling its stake.

The troubled German lender took a near 17% stake in what was then Station Casinos back in 2011 when it remerged from bankruptcy proceedings as part of a settlement over a slug of convertible loans.

Fellow lender JP Morgan exited Station in 2012. A prospectus issued at the end of October also stated that fellow investors Oaktree, with less and 5%, and Fidelity with around 7% would also be selling out their holdings. Red Rock Resorts floated in April and the lock-up period is now closing to coming to an end.

In the three months to September, quarterly net revenues increased 7.3% to $347.1 million while net income for the period was up 59.2% to $33.4 million.

Marc Falcone, executive vice-president and chief financial officer, said he believed the recent growth highlighted the strong underlying fundamentals of the Las Vegas market. “Red Rock Resorts delivered an excellent quarter, as strong trends in both our casino and non-casino segments helped produce our highest year-over-year revenue growth in Las Vegas in over four years,” he added.

The company completed the acquisition of the Palms Casino Resort in early October for $312.5m. The company has also broken ground on the expansion and upgrade of its Palace Station locals property in Las Vegas where it will be spending circa $115m over the next 12 months.

The company said it was still early days in being able to leverage the Palms acquisition fully but it has already integrated its operational systems including the new IGT technology which integrates gameplay with the company’s MyRewards loyalty programme.

“MyRewards has been completely rolled out to all our properties in Las Vegas,” Falcone told analysts on the conference call. “We believe we’re the first in the local market to roll out such a comprehensive loyalty programme.”

Totally Gaming says: It may have appeared anomalous that a German Bank should be a shareholder in a Nevada casino company, yet until May 2014 the same bank was the owner of one Strip casino, the Cosmopolitan, which it eventually sold for $1.7bn. However, such were the ramifications that the financial crisis wrought in the US casino industry. With the bankruptcy well and truly behind it, Red Rock Resorts can now build on its recent track record of revenue uplifts.

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