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LAS VEGAS-Boyd Gaming Corp. is not looking at downsizing its 5,300-unit Eschelon Place project as one gaming analyst suggested last week, a company source tells GlobeSt.com. "We're still very confident of what we said in January," says the source. "We're not expecting the scope to change materially; I can't speak to the budget until we are done getting through the design phase; it's not going to be less."

JP Morgan gaming analyst Harry Curtis said with confidence last Monday that Boyd is evaluating changes that would either reduce the cost or scope of its $4-billion replacement for the Stardust Casino on the Las Vegas Strip. "Depending on the magnitude, a reduction in cost/scope would be positive for the shares because it would reduce concerns about returns…[and] improve negative sentiment/supply concerns for Las Vegas as a whole since Echelon accounts for a significant portion of the capacity entering the market by 2010," wrote Curtis in a memo to investors that reiterated JP Morgan's "Neutral" rating on the company's shares.

In a second memo to investors late last week, a day after Boyd's investor day in Atlantic City, Curtis barely touched on the topic. "[Boyd] did not announce any changes to the scope of the project," was his only statement on the topic.

Boyd Gaming says it plans to operate the 48-year-old Stardust property through the end of the year. Boyd plans to replace the 1,500-room casino-resort with four hotels housing 5,300 rooms, a 140,000-sf casino, theaters, a shopping promenade, spas and convention space. The plan is to start the redevelopment in 2007 and complete it in 2010.

Within the $4-billion Eschelon Place Boyd plans to develop Echelon Resort, a $2.9-billion development that would be wholly owned by Boyd. It would include 3,300 of the 5,300 rooms in two high-rise towers, each with its own full-service spa, as well as the casino, two theaters (one with 4,000 seats and the other with 1,500 seats), 25 restaurants and bars and a pool area.

The rest of Echelon Place would be developed via joint ventures and include three additional hotels, a 750,000-sf outpost of the Las Vegas ExpoCenter, another 200,000 sf of retail space, and several more restaurants, bars and nightclubs. The property also will have covered parking for 8,000 vehicles.

Boyd Gaming has entered into a 50/50 joint venture with the Morgans Hotel Group for two of the Echelon Place hotels, which will cost about $700 million, and has inked a management agreement with Shangri-La Hotels and Resorts for the third. As for the project's retail component, Boyd says it is in discussions with potential strategic partners for a 50/50 joint venture development.

Instant Insights /

Boyd Refutes Talk of Eschelon Downsizing

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