Investor group takes big gamble with Las Vegas resort

LAS VEGAS, Nev. -- To say this town, with its surreal aura of neon lights, showgirls and stacks of hundred-dollar chips, is filled with gamblers is a gross understatement.

But 17 miles from the glitz of The Strip, in the middle of nowhere, a group of real estate investors has embarked on a super gamble -- one that has humbled previous investors.

The bet is a cool $4 billion that a beautiful, but desolate, piece of desert land can be transformed into a major international playground. Think Monte Carlo or Portofino. The resort, named Lake Las Vegas, calls for six luxury hotel- casinos, Rodeo Drive-quality shopping, two Jack Nicklaus-designed golf courses and seven-figure homes inside a gated residential community. The centerpiece of the resort is a 320-acre manmade lake - - the largest privately owned, artificial lake in the state -- with gambling and million-dollar homes right at the water's edge. Promoters paint a picture of a Mediterranean-themed resort, with an aquatic amphitheater, Acapulco-style divers leaping from a 135- foot-high tower, and a hotel on top of a bridge that resembles Italy's famed Ponte Vecchio span. Lake Las Vegas has been under way for six years, and construction of the resort won't be completed for a decade. So far, it consists of 14 custom homes, one golf course and the fish-stocked lake. However, bulldozers have begun pushing around dirt to prepare for construction of the first hotel. The investors have deep pockets. They range from the billionaire Bass brothers of Texas to 49ers owner and shopping center magnate Eddie DeBartolo. DeBartolo is involved in Monte Lago, a $300 million luxury hotel and commercial village of boutiques, restaurants and outdoor cafes. Once it is constructed, the question is whether the unique resort will have the cachet to lure the international set along with U.S. celebrities, corporate executives and other moneyed types. Henry Gluck, co-chairman of Transcontinental Properties, the resort's prime developer, was skeptical when he first visited the rugged site a decade ago. "I walked around those canyons and wash, and I said this is never going to fly," said Gluck. His concern was that Lake Las Vegas was such an expensive, long-range project that only Wall Street could afford to finance it. While Gluck liked the concept, "I didn't think anyone would invest that kind of money and wait this period of time ... putting money in for years before you get anything out. "It took somebody with the staying power of the Bass family," Gluck said. "The moment they came into the picture, I realized this thing was going to be real and just a matter of time before it got developed." Gluck, the architect of the upscale shopping mall at Caesar's on the Strip, joined the team in 1995. Gluck said he came around because he viewed the resort as a logical location -- a sanctuary -- for those who wanted more than gambling. The topography of foothills and small mountains, for example, is in stark contrast to the flatness of Las Vegas. And while The Strip is bright lights, Lake Las Vegas is candlelight, he said. The lake itself, which took 2 1/2 years to fill after it was carved out of the Lava Butte mountain range floor, is a rarity for a U.S. gambling resort. The resort is surrounded by federal lands that cannot be developed. It's also only one mile from Lake Mead, a natural lake in a national park that attracts 10 million people annually. Many analysts who watch the coming and goings of the gaming industry also believe the project won't crap out. "What makes me feel better is that they've been developing this over a long period of time" -- backed by the deep pockets of the Bass brothers and firm commitments from major hotels, said Lee Isgur, an analyst with Corporate Counselors in Woodside, Calif. Furthermore, he said, the resort's location -- away from the hustle and bustle of The Strip -- seems to appeal to "a whole cadre of high-middle-level to low-middle-level executives. "I think you're going to find this is just what the doctor ordered," Isgur said. There are other believers, as well. Since residential sales began, 70 percent of the 350 custom lots have been sold. The lots cost from $200,000 to nearly $2 million for sites on the lake or golf courses. In addition to the custom homes, Lake Las Vegas plans smaller patio homes costing $400,000 to $600,000 and condominiums ranging from $300,000 to $475,000. Whether the $4 billion gamble ultimately pays off, the current investors have pushed further than their predecessors who initially dreamed of making the big score. The first visionary was J. Carlton Adair, an actor and businessman. Three decades ago, Adair began buying land in southern Nevada to create a residential community featuring a manmade lake. He eventually traded the land with the federal government for the 2,045 acres where Lake Las Vegas is now under construction. "Unfortunately, he didn't realize his dream," Gluck said of Adair, who couldn't raise the massive sums he needed and eventually filed for bankruptcy in 1972. Ten years later, a group of California investors bought the land with plans for an even larger residential resort complex. By 1990, unable to raise the necessary capital in the teeth of a looming national recession, the investors sold out to Transcontinental. The resort is closer than ever to reality, but the dice are still tumbling on the question: "If you build it, will they come?"

Copyright 1997
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