North Strip

LAS VEGAS-The defunct Wet ‘n Wild amusement park here has been tied up by Texas developer Christopher Milam. The option agreement calls Milam to pay $450 million or $16.66 million per acre for the 27-acre site. The property is located at the corner of Sahara and Paradise, immediately south of the Sahara Hotel & Casino, which also is on the market.

The amusement park closed in 2004. The seller is Archon Corp., a locally based public gaming company with one operating casino-hotel property to its name, the Pioneer Hotel & Gambling Hall in Laughlin, NV. Milam reportedly plans to develop a mega resort and has retained Paul Steelman Group for the casino, RTKL for the retail component and Skidmore, Owings and Merrill for the hotel tower.

Brian Gordon, a principal with Applied Analysis tells the $17 million per acre being paid for the property is representative of the price being paid for properties with Strip frontage. The north end of the Strip is expected to see lots of development and redevelopment activity over the next five- to 10 years. Projects include Boyd Gaming’s $4-billion Eschelon Place development, several condominium towers and the rumored redevelopment of the Sahara.

“Generally speaking, there are not that many parcels of that size remaining on the Strip,” he says. “It appears investors are willing to pay premiums because the long-run expectation is the north end will look much different in five or 10 years than it does today.”

According to the terms of the deal, Milam was to put up a $5-million deposit on June 27 that is refundable if he backs out during a 30-day due diligence period. After July 24, the deposit becomes nonrefundable. A $40-million deposit is due on or before Sept. 22, 2006. Beginning in October 2007, additional monthly payments of $2.19 million are required. Milam can only exercise the purchase option between the 12th and 18 months following the $40-million payment, according to SEC filings. If the option is not exercised, Archon under certain circumstances can retain the $45 million in earnest payments.

Archon is traded on the OTCBB. On Friday, shares in the company were trading $41. The price is down 8.8% or $3.95 from its Thursday close.