According to the Review-Journal the transaction breaks down to "36 Frontier acres sold for more than $33 million an acre." The previous value for Strip acreage, by the experts interviewed, was only estimated to be between $20-30 million an acre. These numbers are dizzying. But what is clear is that whoever is paying that much (in this case the Israeli-owned El Ad Properties) probably won't launch into major construction for a while. For one, it will take a significant amount of time for the transaction to close, in part, because outsiders from Nevada consistently underestimate the complexity, endless details and hurdles (major and minor) involved in being approved to run a resort in Vegas. The other reason is that I have recently been told by two major local real estate executives that the cost of building on or near the Strip right now is astronomical, to the point where only the foolhardy would embark on a major construction project. The reason is that current construction at Wynn, Venetian, Echelon Place and MGM's Project City Center have made it all but impossible to get the material, expertise and workers to build within any semblance of budgetary reason. In fact, Phil Ruffin, the person who sold the property, in doing so, avoided implementing his own plan to build a 2,750-room resort. The New Frontier currently has a mere 984 rooms. According to the Review-Journal, the new owner plans to place on the spot (after taking down New Frontier) an imitation of New York's Plaza Hotel. This is an odd choice as we already have a New York casino. But more importantly, the actual Plaza Hotel in New York, before its most recent renovations, had fewer than 900 rooms. Who would take down a larger resort to build a smaller resort? Anything is possible in Vegas. So it will be very interesting to find out more about the plans and timeline from El Ad in the coming weeks.

By the way, this is not the most ever given up for Strip real estate. The Review-Journal article notes that Harrah's, in a land trade, paid the equivalent of "almost $85 million an acre for the 4.3 acre site at the northern corner of the Strip and Flamingo Road." The article, however, does not explain Harrah's motives. By gaining that land, Harrahs was able to assemble a parcel of contiguous Strip real estate reaching almost to the Venetian. Harrah's property now goes from the corner of Flamingo (the road) up to include Flamingo, Imperial Palace and Harrah's. At the time there was much talk, and indeed many rumors, of planning for a new megaresort to come out of it all. After all, why else would that land be worth so much to Harrah's? But all that talk ended after Harrah's was purchased by private equity. I made note of this on the Buffet in December.

Anyway, in the Business section of the Review-Journal today the new owners of Harrah's have finally announced their first expansion since acquiring the gaming behemoth. Harrah's is investing $704 million to build a new 798-room casino in Biloxi, Mississippi. Can you blame Harrah's when that same cash can't even buy the land to put up such a building on the Strip? Besides, imagine all the revenue Harrah's would lose by closing all those old casinos during the time it would take to build and open a new, massive one. These days Harrah's executives talk up renovations and upgrades and are working on the little things (iPod docking stations now being put into rooms at the Flamingo) that make a difference without blowing up the house.

Now, back to the New Frontier. So, it will be interesting to see how swiftly the new owners shut down the dated but revenue-producing New Frontier to engage in yet another major construction effort in Las Vegas. I am keeping my fingers crossed but not holding my breath.