On Thursday morning, executives from Penn National Gaming said that although the company recently acquired some of the debt covering M Resort, it does not mean the company has ceased its efforts to obtain a Las Vegas Strip casino.
While Penn National Gaming officials have described the 19-month-old M Resort “as a terrific property and a compelling opportunity,” not much more information has been revealed regarding the company’s plans for M Resort’s future operations.
The Marnell family, the equity holder of the 390-room M Resort, will retain operating privileges of the hotel and casino until changes in ownership and operating have been approved by Nevada gaming regulators. This is not likely to occur until the beginning part of 2011.
M Resort is located about 10 miles from the Las Vegas Strip, a property for which Penn National Gaming paid $230.5 million. At the time of purchase, the resort owed about $860 million on the property that cost about $1 billion to develop.
“We have basically stepped into the role of the bank,” said Penn National Chief Executive Officer Peter Carlino. “It’s an interesting situation. We own the debt and we have an objective in mind. M does not meet our strategic objectives in Las Vegas. It’s a one-off purchase and an opportunity that we believe in the long term.”
According to Penn National Gaming’s Chief Financial Officer Bill Clifford, M Resort had revenues of $106.5 million through August 31 of this year. Clifford believes the resort’s positive cash flow will continue.
“I view this as a purely financial opportunity,” Clifford said. “Over time, in the foreseeable future, we see this asset as a handsome return on investment. There was no other motivation other than that.”
Penn National Gaming executives hope that the addition of the M Resort to Penn National’s hotel family will accommodate its regional customers who wish to visit Las Vegas.
Penn National Gaming opened its newest casino in Maryland last month and is currently working on plans for casinos in Ohio and Kansas.