Click image to see the "before" picture full size. Will the Siena make it through Hot August Nights? Probably, but cooler September nights seem problematic. There are too many DBAs, LLCs and LLPs involved to be 100% certain of the facts, so it isn’t RRB material. But REreno has a time line and some financials posted, and it doesn’t look good. In fact, horrid, and the constant updates from the RGJ aren’t helping matters at all (either is this post!).
Short story,Barney bought and renovated the old Holiday Hotel with financing from his Dad Walter. The $20M construction tab went to to $50M to cover all expenses to open and operate a casino, and Barney started started stiffing Dad in December 2008.
Personally, I’ve got mixed feeling on this one.
Grand Wazoo
Excellent summary of the Siena history on REreno.com Mike. As a relative newcomer to Reno I had no idea this train wreck has been going on for so long. It doesn’t look good. Interestingly the Las Vegas Sun had the first stories on all the past due accounts the Siena has, including $400K to NVEnergy. The RGJ appeared to be totally out to lunch on the Siena story until a few days ago.
Given the Siena will probably eventually be history, which downtown casino property is next? That to me is the real question.
Tom
When `Newt’ first opened that place as the Holiday Hotel, it was sweet, a very classy small hotel. The owner was frequently on-site, and that makes a difference. He had strolling violinists in the casino, and the dining room with big picture windows by the river was first-rate. I remember this new little hotel with all the amenities,the friendly staff, and the cattle rancher owner. That was in about 1962, and my parents said it was the best place to stay in town at the time, and they had tried them all.
When the Reno-Tahoe area clubs were family-run, they were all better, in my opinion. They knew how to make you have a good time, they were entreprenurial pioneers: Bill Harrah, Harvey Gross, Newt Crumley, Dick Graves, and Pappy Smith — with whom my father once had a run-in over those covered wagon “Harold’s Club or Bust” signs popping up on our land without advance permission. But the Smiths made it right with him.
Once the big corporations took things over, it started to change. Now instead of people knowing me, I am just a rating number on some d*%n players’ club card.
Nothing great lasts forever.
HighlyTrainedRealEstateAnalyst
Good post Tom. You are absolutely correct. I try my best to support locally run businesses whenever I can.
Grand Wazoo, it will be interesting to see which casino goes next. I went downtown over the weekend and was not real impressed. Homeless people seemed to outnumber the tourists and other locals (they didn’t,but there were many).
I’ve heard rumors that Circus Circus is in trouble, but I haven’t seen any numbers to confirm.
Carney
Maybe they could turn the place into condos?
Just like all the other successful downtown bellyup casino projects that went condo.
billddrummer
to HighlyTrainedRealEstateAnalyst,
As you know, Circus Circus is a subsidiary of MGM Resorts, with hotels all over the world. If you recall, MGM purchased several of Steve Wynn’s Las Vegas properties, including The Bellagio and The Mirage. It also owns the Excalibur, Luxor and Mandalay Bay, among others.
The company’s most recent project is CityCenter Las Vegas, a multibillion dollar resort that has had financing problems since the credit crisis began.
MGM also has properties in Macau, and smaller units in Jean Nevada, NE of LA.
Considering the vast scope of the organization, I think the Reno property has been forgotten.
CircuitBreaker
Just like Harrahs Reno. Harrahs Entertainment Corp. is the largest gaming company in the world. The Reno property does not amount to the proverbial flea on the camel’s back. It does retain sentimental value as the place where it all started. The property is not profitable, but the loss it generates is such an inconsequential piece of the overall worlwide operation that closing it down would not make any difference.
To the largest gaming corporations in the world, Reno is a backwater operation.
HighlyTrainedRealEstateAnalyst
billdrummer,
Forgotten in the sense that they will just leave it as is, or do you think they will sell it, close it, etc.?
Grand Wazoo
Report on the local TV news last night indicated the Siena dropped employee health insurance some months ago but (1) never told the employees, and (2) continued collecting the employee’s contribution from their pay.
HighlyTrainedRealEstateAnalyst
Grand Wazoo,
I bet many people were most certainly surprised when they tried to utilize their non-existent health insurance. Companies throughout the country are cutting headcount and other costs in an attempt to stay profitable. Remember, many corporations are now soley focused on “maximizing shareholder value”.
doofus
Canceling employee health insurance without notice and still collecting the employee’s share is outright criminal. I don’t care if you are trying to save a business and tap dancing around all your other debts, it is criminal behavior. I wish the Siena well, but I also hope sanctions will be imposed and that they will be severe.
billddrummer
To doofus,
I don’t wish them well, despite what another 350 unemployed workers will do to the local economy.
Management has proven it can’t be trusted.
What needs to happen now is either shut the place down now, during the summer, when there’s a slightly better chance people can find other work, or replace management with honest people.
I don’t think either thing will happen.
Sleezy
People still go downtown?
Choirman
So here’s a question:
Assuming that the Siena owner is not siphoning profits into a Cayman corporation owned by a Swiss trust domiciled in the Cook Islands, and that the place really is losing money, what is it worth?
Is it worth anything?
What would be a fair price for a casino that cannot make a profit?
Does it have any value beyond the land and building?
How much can the land and building be worth if the property is a loser as a casino?
What other possible use could be made of the building and land? (Puh-lease don’t say condos).
I’d like to hear from some the experts on this blog.
billddrummer
To Choirman,
If you’re a real estate appraiser, you don’t give any value to a ‘going concern’ when you’re valuing real estate–just the land and buildings as they sit. The rationale is simple: If the business wasn’t occupying the building, what’s the building worth in the current market? (Yhe same question you asked.)
The location has some advantages. Being a riverfront property is a positive. Being downtown east of the most blighted areas is a positive.
But there are some negatives. Because of the building’s design, it would be hard to envision it as anything other than a casino-hotel.
The physical plant is old–I believe the original build date was in the 1950s. And even with the money sunk into the place after it became the Siena, I don’t know whether the improvements have extended the life of the property. {According to the Assessor, the WAY [Weighted Average Year]is 1992, despite the multi-millions of dollars that were poured into the property after it was taken over by the Ng group).
And don’t even look at the hotel properties that have gone into foreclosure this year (3131 South Virginia comes to mind).
Your question is a valid one. What’s the Siena worth as a building, without an operating casino?
REreno
Siena declares BK. Some of the back story and some speculation is posted at http://Rereno.com. Feel free to comment!
AnotherNgVictim
To correct a bit of the info provided by REreno in his blog;
One South Lake Street, LLC (Barney Ng) borrowed $50 million dollars from RE Reno, LLC ( father Walter Ng) for the Siena Hotel, Spa and Casino.
In turn, RE Reno, LLC (Walter Ng) got $30 million from people who invested directly into RE Reno and another $20 million from the Ng’s RE Loans, LLC investment pool. A total of $50 million.
Barney and Walter jointly issued a ‘guarantee’ to the investors in RE Reno. The guarantee is now deemed by the Ngs to be nothing more than a “feel good document”. They will not honor it.
On Nov. 1, 2008, One South Lake Street (Barney) defaulted on the loan from RE Reno (Walter) and RE Reno (Walter) in turn defaulted on the loan from RE Loans plus the loans from hundreds of people in RE Reno. Barney owes Walter $50 million and Walter owes the same $50 million to his investors in RE Reno and RE Loans.
At the same time, Walter and Kelly’s (Kelly is Walters other son) RE Loans, LLC defaulted on its entire $750 million approx. (according to property appraiser and loan arranger Barney) investment fund.
(It wasn’t long thereafter that they also defaulted on their Mortgage Fund ’08 investment program as well.)
Total defaults for the various Ng controlled investment funds total near one billion dollars. There’s also a $65+ million line of credit loan from Wells Fargo to RE Loans that’s been in default for over a year.
Now, here’s the hook. Walter borrowed the $20 million from RE Loans to loan to Barney, One South Lake, while Barney was the President of
Bar K, the loan servicer for RE Loans. Question: Did Barney, as President of Bar K, set up a loan of $20 million from RE Loans that essentially ended up in his own pocket?
He claims that the Managers, Walter and Kelly approved the loan, not him. So what? The result was the same.
Wild Game Ng is a separate company owned by Barney Ng to fund his gambling operations. In addition to the other lawsuits mentioned, there’s one between he (Wild Game Ng) and former B4 Partners, LLC partner Bruce Horwitz/Pensco Trust to the tune of about a million dollars and another against Barney (Wild Game Ng) by Wells Fargo Bank for breach of contract.
To see the tangled web of just a portion of the Ng family empire see
http://www.reloansllc.com/about.htm and
http://www.reloansllc.com/info.htm
Loretta
There is great info at rereno.com – glad there are people out there trying to get to the bottom of this mess. the people of reno deserve better than the owners and managers are giving them. hear that barney and clyde????