Las Vegas Strip real estate prices fuel Riviera stock price

ASSOCIATED PRESS LAS VEGAS (AP) - A blitz of merger and acquisition activity in the casino industry in addition to skyrocketing land values on the Strip has lifted casino stocks to new highs in recent weeks. But no longtime casino company has benefited more spectacularly than Riviera Holdings Corp., the owner of the aging Riviera hotel and casino. Shares of Riviera Holdings are worth more than seven times where they traded in early January, falling more than $2 per share in early trading Tuesday to $38.98 on the American Stock Exchange. Deutsche Bank gambling analyst Marc Falcone attributes some of the stock's run up to recent calculations of potential land values on the Strip. The Riviera's 26 acres on the Strip represent premier developable real estate and at estimated Strip prices of $15 million to $20 million an acre, the stock "would be immensely undervalued" at its current share price, Falcone said. Donald Trump, whose money-losing casino company recently filed for Chapter 11 bankruptcy protection, made a 33 percent profit buying and selling Riviera stock. Trump became a major shareholder in 2003 when he increased his stake in the company to 10 percent and triggered his application for a Nevada gambling license, which was approved this year. But Trump sold his stake in April, netting a profit of about $900,000 on the $2.7 million he invested in Riviera shares in 2002 and 2003. Had he held onto his Riviera shares, Trump would have made another $11 million or so for a total sale of about $14 million at Tuesday morning's share price. The casino and real estate boss, who has found success developing high-rise condominiums and fronting the hit reality show "The Apprentice," may not need the extra money. Trump said he has no regrets about his investment in Riviera, which he bought to get a Nevada gambling license. "I bought it low," Trump told the Las Vegas Sun. "In retrospect I could have kept it." "I never regret anything," he added. While some speculated that Trump might have been planning a takeover, he instead cultivated a partnership with New Frontier owner Phil Ruffin and in July unveiled plans for Trump International Hotel and Tower, a $300 million luxury condo tower with more than 1,000 units that will be built by 2006. Riviera Chief Financial Officer Duane Krohn declined to say whether the company was talking to interested parties, but said favorable news in the gambling industry tends to affect share prices. Krohn also said more recent news stories and analyst reports discussing land values could be fueling speculation in the shares. "Every time somebody says 'land values,' all the analysts see who's got land on the Strip," he said. About six acres of the Riviera's 26-acre site isn't taken up by the hotel or casino and could be more intensely developed. The company has previously discussed the possibility of redeveloping the property in stages so as not to disrupt business. Falcone declined to comment on which companies might be talking to Riviera about a deal, but analysts have previously said that any major gambling company looking for prime Strip land might well consider buying the company.