Vol. 4, No. 6, June 2007
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Icahn’s Exit
When he first bought the Stratosphere in Las Vegas more than 10 years ago, observers expected Carl Icahn to sell out in a year or two, making his normal millions in profits. It took much longer than that, but Icahn’s rewards were much larger, too, an estimated $1 billion.
Icahn’s American Real Estate Partners exited the casino industry completely last month when it sold its Nevada operations—the Stratosphere and Arizona Charlies East and West in Las Vegas, and the Aquarius in Laughlin. When a $1.3 billion offer from Whitehall Street Real Estate Funds, a division of Goldman Sachs, came across Icahn’s desk, he jumped at the deal.
The Stratosphere includes a 2,444-room hotel and a 1,149-foot tower that has become a must-see attraction in Las Vegas. It is the tallest structure in the United States west of the Mississippi River. More importantly, the deal includes 17 acres of vacant land surrounding the hotel. The Aquarius, formerly the Flamingo Laughlin, has about 1,900 rooms and is one of the largest hotels in Laughlin, about 100 miles south of Las Vegas, and has recently been re-themed and renovated. The two Arizona Charlies properties are “locals” casinos in Las Vegas. The sold properties together were known as American Casino & Entertainment Properties (ACEP).
ACEP sold the Sands in Atlantic City last year to Pinnacle Entertainment for $250 million. Richard Brown, president and COO of ACEP, says Icahn simply felt it was the correct time to sell.
“When Carl bought these properties they were all undervalued and we were fortunate enough to be able to turn these properties around,” Brown told Casino Connection. “And I can’t commend the management team here in Nevada, and the staff and line employees at each property enough because they were the ones who really turned them around.”
Whitehall already has a stake in Nevada gaming with a 40 percent share in the Las Vegas Hilton, and is, therefore, already licensed. Nevada Gaming Control Board member Mark Clayton says that should speed approval of the deal.
