The Siegel Group, A Commercial Real Estate and Business Development Company
 

IN THE NEWS

GlobeSt.com Commercial Real Estate News and Property Resource
January 06, 2009

Siegel Group Buys Second Hotel-Casino for $12M

By Brian K. Miller

LAS VEGAS-The Siegel Group Nevada Inc. acquired its second hotel-casino here just before the end of the year in a $12-million deal that includes the Barcelona Hotel & Casino, an adjacent mini-mart and gas station, and vacant land. The aggregate assessed value of the three properties is $26.8 million, according to Clark County records. Siegel Group acquired the properties via Barcelona Holdings LLC. The seller is listed as Jewel L. Dixon Jr.

The 179-room Barcelona Hotel & Casino sits on 4.2 acres and the intersection of East Craig Road and North Nellis Boulevard, just outside the city of North Las Vegas near Nellis Air Force Base and the Las Vegas Motor Speedway. Amenities include gaming area with 260 slots machines, table games and a live sports-book, live entertainment and a 24-hour restaurant and bar. The adjacent gas station and convenience store combo sits on 0.7 acres and is leased to a third party. The vacant land totals 5.1 acres and is zoned for apartments.

Siegel Group’s business development executive Michael Crandall tells Globest.com the company put the property under contract eight months ago, with most of the time spent getting United Coin approved to operate the property so the gaming would not have to be shut down temporarily upon completion of the transaction. The long escrow also saved the company $3 million in acquisition costs, as the agreed-upon price was initially $15 million, according to local sources. Without confirming a 20% discount Crandall attributed any savings to “market conditions.”

Siegel Group affiliate Sasco Properties will manage the hotel and United Coin Machine Co. will manage the gaming until while Siegel Group chief executive Stephen Siegel works to become licensed to operate casino properties himself. United Coin also manages the gaming at the Gold Spike hotel and casino in Downtown Las Vegas, which Siegel Group acquired in early 2008.

Siegel Group operates a growing chain of extended-stay apartment and hotel properties in the Las Vegas region that operate as Siegel Suites and currently total approximately 2,900 units. Barcelona will operate under a new spin-off brand, Siegel Slots & Suites, which will offer gaming at its properties in addition to daily and weekly rental rates. Siegel Suites properties do not offer daily rates or gaming but do offer furnished units.

Also new to the company is a rewards/customer loyalty program that covers all of the company’s properties, including its two properties not under the Siegel brand, the Gold Spike hotel casino in Downtown Las Vegas, which the company acquired in February, and the Mount Charleston Resort, a recently acquired 64-room mountain resort licensed for slot machines that is located 35 minutes from Downtown Las Vegas in the Toiyabe National Forest. The program includes exclusive promotions, discounts, and give-ways including free-rent, free slot-play and free food and beverage as well as complimentary accommodations at any of the company’s 22 properties.

“Our residents and customers will earn points for everything they do—paying rent on time, playing our slots, eating our food—and they will be able to redeem those points to pay for any of those things as well,” Stephen Siegel tells GlobeSt.com. “We will shuttle them to our properties and give them things like free rent for a year, which nobody else can do.”

In explaining the acquisition, Crandall says there are no gaming properties within four miles of the Barcelona, “which will enable the Siegel Group to capitalize on an underserved area and a growing local’s population,” the company’s target demographic. In addition, he says the property is the closest gaming outlet to both the air force base and the speedway. As for the excess land, Crandall says there is as yet no timeline for development and that it likely will be additional apartments for its Siegel Suites chain.

Stephen Siegel tells GlobeSt.com that Barcelona is “not doing that bad” given the poor economy and the fact that it was being run “horribly” prior to their taking ownership. ““Our properties already have thousands of customers so we’ll go in and shore up the business with new management and better policies and procedures, and then use our cross promotion and rewards programs to draw in new customers and keep the regulars coming back.”

Despite the troubled credit markets, Barcelona marked Siegel Group’s sixth and final acquisition of 2008. The company was able to obtain 75% bank financing for the Barcelona acquisition, though additional loan details weren’t immediately available. In addition to the Gold Spike, 2008 acquisitions included the Mt. Charleston Hotel, the Mark Twain and Casa Palms apartments, and Deer Creek; a 330 unit property acquired out of bankruptcy.

“(Barcelona), like most of our acquisitions, has tremendous upside-potential and we are fortunate to once again have acquired such a value-added property at a substantial discount in an area with minimal competition,” Stephen Siegel says in a prepared statement provided to GlobeSt.com.