If ever a place needed an owner handy with his hands with a sharp eye for figures, it’s the lowly Lucky Dragon Hotel and Casino just off the Strip.
And this week, after more than a month of rumors linking him to interest in the bankrupt property, equipment rental king Don Ahern announced publicly his purchase of the Asian-themed operation for a bargain price: $36 million.
The Las Vegas Review-Journal first reported the sale, which came after the professionals at CBRE waded through weeks of interest from dreamers, schemers and even some prospective buyers with verifiable bankrolls before Las Vegan Ahern quietly completed the transaction.
Talk about a bargain.
Its Chinese investors alone dumped $89.5 million into the property, which was competed over-budget at $165 million. In November 2017, it received a generous appraisal of $143 million.
Despite its many challenges, it collapsed into bankruptcy and the subsequent litigation of Chinese EB-5 investors who allege they were defrauded out of millions in investments in the project, Ahern now owns a diminutive but sparkling little spot.
At least, that’s what CBRE vice president John Knott believes. His office handled the transaction on behalf of lender Snow Covered Capital, LLC. A federal bankruptcy judge approved the sale of the property back in October, but no bidders were willing to meet Snow Covered’s $35 million minimum bid.
Since then, Knott said CBRE has entertained a torrent of inquiries, some of them pretty wild, from people more interested in selling their vision than buying the property.
Ahern was just the opposite. Those who have followed his career have watched him expand Ahern Rentals into a giant in the equipment renting industry, seen him take a terrible hit during the recession, and followed his support of conservative Republican candidates for president. His fortunes have risen with the rebounding economy.
And now he’s preparing to change the luck of the Lucky Dragon.
“This was a very challenged business plan when you think about it,” Knott says.
Call Knott the king of understatement.
The Lucky Dragon marketed itself as a first-of-its-kind authentic Asian-themed casino in Las Vegas. It attracted 179 Chinese investors, each of whom dropped $500,000 on the idea and the chance to obtain EB-5 visas in the process. Now some of them are suing the original developers. It’s a list headed by former Las Vegas Sands President William Weidner, who helped turn the casino company into a giant in large part due to its enormous success in Macau.
The marketing concept was flawed by the simple fact that high-rolling casino customers – Asian or not – want the best accommodations money can buy. Major Las Vegas casino operators have long understood the power of marketing to Asian customers from China, Japan, Korea, and Canada and domestically from cities such as San Francisco and Los Angeles. Locals giants Station Casinos and the South Point are experts at the game as well.
The Lucky Dragon opened in November 2016 on a 2.5-acre parcel with a 27,500-square-foot casino space, a multi-level gaming area, 37 table games, 287 slot machines and the minimum 203 hotel rooms. Of those, the largest of its 14 suites was 1,200 square feet. (Fairly small compared to the luxury offerings of other Strip resorts.)
With four “Asian inspired” restaurants, the Lucky Dragon appeared to believe that gamblers traveling thousands of miles to Las Vegas would only want cuisine from back home.
The Lucky Dragon, Knott said, suffered most of all from a run of bad luck. Had the north end of the Strip gone according to the plans of casino developers and the Las Vegas Convention and Visitors Authority, the Dragon’s fortunes might have been different.
Now it’s Ahern’s turn to try his luck. He stated publicly this week that he didn’t plan to run a casino and wasn’t interested in keeping the original name on the building.
But, for what it’s worth for the new owner, Knott says the interest in the place was robust – if at times a little weird.
“We had an incredible number of inquiries on this property,” he says. “Never have I seen so many calls, NDAs (nondisclosure agreements), three times the usual number.”
There was chatter about joint venturing, offers of $15 million and $20 million, and another for $60 million that didn’t materialize. There was talk about converting the place into a variety of nightclubs, even a marijuana-friendly hotel.
“It was broad in terms of the interest level,” he says, admitting there was no shortage of flakes in that mix.
But here’s some good news. Despite all the skepticism from the grandstands, Knott believes the Lucky Dragon’s prospects are better than the publicity it’s received.
“I think the location is much better than we locals think,” Knott says. “We have the prejudice of what’s on the north side.”
That is to say, the neighborhood formerly known as Naked City.
But he likes what Blake Sartini is doing at the nearby Stratosphere, is focused on the festival grounds being created by MGM Resorts International, anticipates big traffic from the new convention center project, and the eventual completion of Genting’s Resorts World Las Vegas on the site of the Stardust and the former Fontainebleau high-rise as well. He reminds a skeptic that a property a short walk from the Lucky Dragon not long ago was sold for $50 million.
In that light, Ahern’s $36 million looks like an even better bargain.
Who knows, maybe that Dragon’s luck is about to turn.
Contact John L. Smith at jlnevadasmith@gmail.com. On Twitter: @jlnevadasmith.
