Station Casinos Closed Properties, Including Palms, Fate Up in the Air

Posted on: August 4, 2020, 07:49h. 

Last updated on: August 5, 2020, 12:58h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

It’s not clear when, or even if, the four Station Casino properties in Las Vegas that are currently closed will reopen.

Station Casinos Properties Remain Closed
Red Rock executives, who own The Palms Las Vegas, can’t say for sure when or if this and three other Station casinos will reopen. (Image: Reno Gazette-Journal)

That’s the sentiment of high-ranking executives from Red Rock Resorts (NASDAQ:RRR), the parent company of Station Casinos, regarding the Fiesta Henderson, Fiesta Rancho, Palms, and Texas Station. Those venues remain closed while more than three-quarters of gaming properties in Southern Nevada reopened over the past two months.

We don’t know if or when we are going to reopen any of the closed properties. We think it’s too early to make that decision at this time,” said Red Rock CEO Frank Fertitta in response to an analyst’s question on the company’s second-quarter earnings conference call Tuesday afternoon.

As was reported on July 1, filings with the Nevada Gaming Control Board (NGCB) indicate the four aforementioned casinos could remain closed until June 30, 2021.

Lacking Clarity

While executives sounded a somber tone about the fate of the four casinos, Red Rock provided a breath of fresh air this earnings season, parting from the gaming industry norm in reporting better-than-expected numbers for the June quarter.

The Las Vegas-based company said it lost $1.01 a share on revenue of $108.47 million. Analysts expected a loss of $1.16 on sales of $73.63 million. Fertitta noted that the operator is pleased with reopening results thus far, noting that it’s been able to move some play from the closed properties to Station venues that are open.

However, he added Red Rock is still trying to get clarity to navigate the coronavirus climate. The clarity sentiment was echoed by CFO Stephen Cootey regarding the closed casinos.

“I think it’s too early to assess right now,” said Cootey on the call. “Right now we have very little clarity on our current economic environment. And so…Palms is currently undecided whether we are going to open it right now.”

Palms Speculation Subdued

Conjecture about the fate of the Palms, the glitziest of the four still shuttered venues, swirls from time-to-time, with the Las Vegas rumor mill kicking up speculation that Red Rock will look to sell the resort.

However, Fertitta quashed that talk following the company’s first-quarter earnings report.

This time around, analysts didn’t broach the subject of the Palms or any other Station property being sold, and the idea of divestment wasn’t mentioned by executives participating in the call.

Even if Fertitta and the team are mulling sales and keeping that idea close to their respective vests, now may not be the right time to sell. First, other Las Vegas gaming venues are for sale. Second, the casino resorts that were sold during the COVID-19 shutdown period traded at rock-bottom price tags. That was confirmed that with a lack of clarity as to when the industry will rebound in earnest, sellers aren’t dealing from positions of strength.