Cover, Applied Analysis Resort Industry Observer

March 2012

Market continues to strengthen

With the close of 2011, it appears economic conditions in the resort industry are slowly starting to turn around. Each of the major operators in Las Vegas reported increases in net revenues and adjusted EBITDA for the fourth quarter of 2011. In addition, average daily room rate (ADR) increased across all companies, driving improvements in revenue per available room (RevPAR). Most operators attributed their improved performance to strong convention and group bookings. According to the Las Vegas Convention and Visitors Authority, Las Vegas welcomed 3.0 million visitors in December for a 2011 total of 38.9 million, up 4.3 percent over last year. Market-wide ADR increased a significant 10.6 percent in December to $101.58, while the average occupancy rate was up a more modest 0.7 points to 73.1 percent.

Caesars Entertainment continues to expand and develop in Las Vegas. In January, the company opened the majority of the rooms at Octavius Tower, which will add a total of 668 rooms when fully completed. Rates for the upscale rooms start at $249 midweek. The company has also broken ground on the Linq retail and entertainment center, to be completed in mid-2013. Development of both projects was slowed with the economic downturn.

Resort industry investments have been reported at a number of other properties along the Las Vegas Strip. MGM Resorts International recently announced a $160-million guest room renovation at MGM Grand while Wynn Resorts and Las Vegas Sands have reported other property upgrades. It appears operators believe these investments will generate sufficient returns in the post-recession cycle.

Station Casinos
Q4 revenues up 9 percent

Station Casinos reported net revenues of $303.5 million in the fourth quarter of 2011, up 9.0 percent from the same quarter last year. Adjusted EBITDA increased 7.3 percent to $82.2 million. Despite revenue gains, the company reported a loss of $4.2 million during the fourth quarter, ending the year with a loss of $40.8 million. Casino revenues were $220.5 million for the quarter, representing a 4.4-percent increase over the $211.3 million reported last year. All non-gaming revenue sources showed year-over-year gains as well. Food and beverage revenues increased 8.6 percent, while other revenue increased 14.0 percent. Room revenues increased 14.6 percent to $25.6 million, attributable to a 5.0-percentage point increase in occupancy rate to 86.0 percent and a 6.2-percent increase in average daily rate to $69. The company notes that highlights for 2011 included the launching of its "We Love Locals" campaign, which helped continue to strengthen its brand image. In addition, Station Casinos reinstated the matching contribution to its 401(k) plan, began offering team members a free HMO option for their medical care, and enhanced its Boarding Pass player's reward program.

Las Vegas Sands
Reports company and industry record EBITDA

Company-wide net revenue for Las Vegas Sands (LVS) totaled a record $2.54 billion for the fourth quarter of 2011, up 26.3 percent over the same period in 2010. In addition, adjusted EBITDA increased 30.0 percent to a company and industry record of $960.6 million, attributable to continued growth at its properties in Macao and Singapore. Las Vegas Sands reports that in less than two months, it will be celebrating the debut of the largest Integrated Resort in the company's history with the opening of Sands Cotai Central.

In Las Vegas, net revenues at Venetian and Palazzo increased 9.3 percent to $339.5 million. Casino revenues declined 2.9 percent to $118.3 million during the quarter. However, room revenues increased 11.0 percent to $110.6 million attributable to stronger group meeting and convention business. Revenue per available room (RevPAR) increased 13.0 percent to $174 due to a 9.0-percentage-point increase in occupancy rate and a 1.6-percent increase in average daily room rate. In addition, food and beverage revenues increased 9.7 percent during the quarter, while convention and retail revenues increased 21.7 percent.

The Cosmopolitan
Completes first full year of operations

The Cosmopolitan, which is owned and operated by Nevada Property 1, reported net revenues of $478.6 million for its first full year of operations. Adjusted EBITDA for the year was a loss of $22.1 million. The company reported casino revenues of $107.4 million, with a table games win percentage of 14.4 percent, which is within the property's expected range of 12 percent to 15 percent. In addition, food and beverage revenues were $258.5 million and entertainment and retail revenues were $24.7 million. Room revenues totaled $178.4 million, while revenue per available room was $199, attributable to an occupancy rate of 84.3% and an average daily rate of $237. The company notes that its hotel results for 2011 reflect strong demand in both the free independent traveler and group sales categories. Also notable, the Cosmopolitan's Marquee Nightclub and Dayclub was named the highest grossing bar in the United States for 2011 by JustLuxe Affluent Lifestyle Guide.

Caesars Entertainment
Opens Octavius Tower

Caesars Entertainment (CZR) reported total net revenues of $2.2 billion during the fourth quarter of 2011, up 2.4 percent over the same period last year. Property EBITDA increased 7.6 percent to $492.8 million. The company attributes its revenue and EBITDA increases during the quarter to strong results in Las Vegas, internationally and online. In Las Vegas, net revenues increased 5.6 percent to $767.2 million, while property EBITDA increased 22.2 percent to $224.4 million. Hotel revenues increased 8.2 percent, attributable to an 8.2-percent increase in the cash average daily room rate to $91 and a 1.4-percentage point increase in occupancy. In early January 2012, Caesars Entertainment opened the 668-room Octavius Tower in Las Vegas. Also notable, in February 2012, the company announced the start of its public share listing process. Caesars Entertainment offered over 1.8 million shares of its common stock on the Nasdaq Global Select Market at an initial price of $9 per share. Work continues to progress on the Linq retail, dining and entertainment project on the Las Vegas Strip, which is set to open in mid to late 2013.

Boyd Gaming
Revenue increases in each business segment

Boyd Gaming (BYD) reported total net revenues of $606.7 million during the fourth quarter of 2011, up 9.9 percent when compared to the same quarter of last year. Adjusted EBITDA was $114.3 million, representing a 14.3-percent increase over 2010. The fourth quarter of 2011 represents the first time in several years that revenue increases were reported in each of Boyd's business segments. In the Las Vegas Locals market, net revenues were up slightly compared to the prior year quarter at $152.7 million, while adjusted EBITDA increased 8.0 percent to $36.8 million attributable to year-over-year EBITDA growth at all four major properties in the region. The company's downtown Las Vegas segment reported an increase of 2.7 percent in net revenue to $58.7 million, while adjusted EBITDA remained flat due to elevated fuel expense associated with Boyd's Hawaiian charter service. Boyd remains optimistic about the downtown segment, given development activity in the area. The company also continues to support the legalization of Internet gaming and is prepared to enter the market on a state-by-state basis, if necessary.

MGM Resorts International
Convention trends remain strong

MGM Resorts International (MGM) reported total net revenue of $2.3 billion during the fourth quarter of 2011, representing a 7.0-percent increase over the same quarter of 2010 (excluding results for MGM China, which the company began consolidating as of June 3, 2011). Adjusted EBITDA at the company's wholly owned domestic resorts increased 18.0 percent to $319 million. The company notes that throughout 2011, it has enhanced customer experience through reinvestments in its properties and the M life customer loyalty program.

On the Las Vegas Strip, net revenues increased 8.3 percent to $1.2 billion, while adjusted EBITDA increased 19.8 percent to $260.0 million. Revenue per available room increased 13 percent in the fourth quarter to $111, due to a 3.0-percentage point increase in occupancy to 87 percent and a 9.3-percent increase in average daily room rate to $129. The company notes that convention trends remained strong during the quarter and helped contribute to a 40.0-percent increase in EBITDA at Mandalay Bay. In addition, Aria has emerged as one of the top convention destinations in the country with over 100 percent of its planned convention room nights already booked for 2012. Earlier this month, the company announced a strategic marketing relationship with Ameristar Casinos. The agreement will allow MGM Resorts M life members to receive benefits at Ameristar properties and Ameristar's Star Awards/Plateau Players Club members to receive benefits at MGM Resorts properties.

Wynn Resorts
Reports record breaking casino win

Net revenues for Wynn Resorts, Ltd. (WYNN) reached $1.3 billion in the fourth quarter of 2011, up 8.6 percent over last year. The increase was largely attributable to a 9.1-percent increase in revenues from Macau and a 7.2-percent revenue increase in Las Vegas. Adjusted EBITDA increased 10.1 percent to $402.2 million, sourced primarily to a 5.5-percent increase in Macau and a 30.3-percent increase in Las Vegas. Casino revenues in Las Vegas increased 4.7 percent to $145.8 million during the quarter, with a table games win percentage of 23.3 percent, which is within the expected range.

The company notes that its casino win of $776 million in 2011 in Las Vegas broke the historical record for a licensed gaming facility in the state of Nevada. In addition, all non-gaming segments reported increases during the quarter, resulting in an increase in non-gaming revenue of 6.8 percent to $246.6 million. Room revenues increased 11.7 percent during the quarter due to a 6.3-percent increase in average daily rate and more rooms available (9 percent were out of service in the prior year quarter for renovations). Wynn Resorts notes that 2011 was a breakthrough year in terms of revenue generated by convention trips.

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December 2011

Third quarter improvements reported by major operators

With many Las Vegas operators reporting stronger-than-expected demand in the free independent traveler ("FIT") and leisure segments, average daily room rates ("ADR") showed considerable improvement during the third quarter. For several properties, year-over-year growth in ADR was higher during the latest quarter than during the second quarter of 2011. Convention demand has also improved, and several operators noted that the outlook is strong through 2012 and beyond. Consistent with the trend seen throughout the market during the past several years, food and beverage, retail and entertainment revenues increased for many as demand for - as well as the scope and breadth of offerings of - non-gaming activities continues to evolve. In September, the Las Vegas Convention and Visitors Authority reported a 5.5-percent increase in visitor volume, with convention attendance increasing 49.1 percent. In addition, market-wide ADR increased 14.6 percent, while citywide occupancy increased 3.6-percentage points.

While it will be some time before new megaresorts appear on the Las Vegas Strip, there is a new addition on the horizon. Caesars Entertainment has raised the necessary funds to begin building Project Linq. The company is investing $500 million in the project, which will include retail, dining, entertainment and a 550-foot observation wheel. Construction is expected to start in the fourth quarter of 2011, and it is estimated 3,000 construction workers will be employed to complete the project.

Station Casinos
Completes first full quarter after restructuring

Station Casinos reported net revenues of $282.4 million for the third quarter of 2011, representing a 5.7-percent increase over the same period last year. Absent from the company's operating statement this quarter were significant impairment charges and other restructuring items, marking the end of the major reorganization that took place over the past several years. During the second quarter, Station Casinos completed its plan of restructuring, which combined Station Casinos, Inc. and Green Valley Ranch Gaming, LLC into Station Casinos, LLC. The company reported casino revenues of $203.2 million during the third quarter of 2011, representing a 0.9-percent increase over last year, which the company attributes to a 2.8-percent increase in slot revenues due to the success of its marketing campaigns. Food and beverage revenue increased 9.5 percent during the quarter to $53.4 million, attributable to a 39.1-percent increase in the number of restaurant guests served, which was partially offset by a decline in average guest check of 14.8 percent due to price decreases at several eateries. Hotel revenues were $25.1 million, up 12.0 percent year-over-year. The company reported a 5.0-percentage point increase in occupancy rate and a 6.2-percent increase in average daily rate, which led to an 11.3-percent increase in revenue per available room.

The Cosmopolitan
Completes first nine months of operations

The Cosmopolitan, which opened for business December 15, 2010, recently completed its first full nine months of operations. The property reported net revenues of $126.6 million in the third quarter of 2011, with an adjusted EBITDA of negative $4.3 million. Gaming revenues totaled $23.9 million during the quarter, with the company reporting a 7.6-percent table games hold percentage, which was lower than the expected range of 12 to 15 percent. Meanwhile, hotel revenues were $49.3 million, attributable to an average daily rate of $233 and an occupancy rate of 83.7 percent. The company notes that The Cosmopolitan experienced high demand from both the free independent traveler and group segments. Food and beverage revenues totaled $68.9 million for the third quarter, while entertainment, retail and other revenues were $6.8 million. In September 2011, The Cosmopolitan completed the Phase II addition of 968 hotel and condominium-hotel style units, which increased the total number of available rooms to 2,976. The company still has plans to add 19 condominium or hotel style units and a 65,000 square-foot, 1,800-seat showroom at a later date.

Wynn Resorts
Weaker performance at home due to lower hold percentage

Wynn Resorts reported total net revenues of $1.3 billion in the third quarter of 2011, up 30 percent over the $1.0 billion reported in the third quarter of 2010. The dramatic increase is primarily attributable to a 41.7-percent increase in net revenues at Wynn Macau, which rose from $671.4 million in 2010 to $951.4 million in 2011. Meanwhile, adjusted property EBITDA for the company was $381.1 million in the third quarter, up 38.8 percent when compared to the same period last year. In Las Vegas, net revenues increased 3.7 percent to $346.9 million, while adjusted property EBITDA increased 11.3 percent to $85.1 million.

Casino revenues in Las Vegas were $126.9 million in the third quarter of 2011, representing an 8.3-percent decline when compared to the same period last year. The company notes that the decline is primarily due to a lower baccarat hold percentage. Meanwhile, non-casino revenues were reported at $265.9 million, up 11.1 percent over last year. Room revenues were up 18.7 percent, while RevPAR was up 14.9 percent to $212, attributable to a 14.2-percent increase in ADR to $240 and occupancy of 88.3 percent (compared to 87.8 percent last year). In addition, food and beverage revenues increased 6.7 percent, retail revenues increased 3.9 percent, and entertainment revenues increased 20.7 percent, attributable to increased revenue from Garth Brooks and Le Rêve.

Caesars Entertainment
Increases in both rated trips and spend per rated trip in Las Vegas

Caesars Entertainment reported total net revenues of $2.3 billion in the third quarter of 2011, down 1.5 percent compared to the same period last year. Property EBITDA decreased 1.7 percent from $505.6 million to $497.2 million during the quarter. The company attributes its overall performance to the closure of four of its Atlantic City properties due to Hurricane Irene, which was partially offset by strong performances in Las Vegas.

Net revenues for Caesars Entertainment's Las Vegas properties were $733.1 million in the third quarter, representing a 2.9-percent increase over the same period last year. Property EBITDA was $172.9 million, up 4.8 percent. The company notes that net revenues in the region increased due to a 3.0-percent increase in rated trips and a 3.1-percent increase in spend per rated trip, driven by the VIP segment. In addition, hotel revenues increased 10.8 percent during the quarter, due to a 9.5-percent increase in average daily room rates and a 3.3-percentage-point increase in total occupancy. Caesars Entertainment notes that its visitor mix in Las Vegas consisted of approximately 17 percent group, 40 percent casino and 43 percent FIT and wholesale during the third quarter. Generally, wholesale rooms are declining, while group bookings are increasing. In terms of future developments, the 662-room Octavius Tower expansion remains on schedule and is expected to open in January 2012. In addition, on November 15, the company announced plans to explore publicly offering its common stock.

Boyd Gaming
Reports improvements in both the Las Vegas Locals and Downtown segments

Boyd Gaming reported net revenues of $590.2 million for the third quarter of 2011, down a modest 0.7 percent when compared to the same period last year. Meanwhile, adjusted EBITDA increased 5.8 percent, or from $115.4 million in 2010 to $122.0 million in 2011. Boyd Gaming's wholly-owned operations reported adjusted EBITDA growth of 17.5 percent, which the company attributes to its diversified portfolio, exceptional customer experience and tight control on costs.

Net revenues for the Las Vegas Locals market were $145.9 million in the third quarter, up 0.2 percent compared to last year. Meanwhile, adjusted EBITDA was $30.8 million, representing a 17.9-percent increase over last year and the second consecutive quarter of year-over-year growth. The company notes that three of the four major properties in the region reported gains during the quarter, led by The Orleans, which reported an EBITDA increase of 28 percent. The Downtown Las Vegas market reported net revenues of $53.3 million for the third quarter of 2011, up 2.8 percent over last year. Adjusted EBITDA increased 5.7 percent to $6.0 million. The company notes that the results in the segment continue to be impacted by higher fuel costs associated with its Hawaiian charter service. However, the company's upgrade to a Boeing 767 has allowed it to transport an additional 6,000 customers per year.

MGM Resorts International
Better-than-expected demand from FIT and leisure segments

MGM Resorts International reported total net revenues of $2.2 billion during the third quarter of 2011, representing a 42.5-percent increase over the same quarter of 2010 largely due to the consolidation of MGM China. In addition, adjusted property EBITDA increased 60.1 percent to $492.1 million. In Las Vegas, net revenues increased 3.5 percent to $1.2 billion, while adjusted EBITDA increased 9.7 percent to $267.9 million. RevPAR increased 12.5 percent, attributable to an increase in ADR of 11.7 percent and an occupancy rate of 95 percent. The company notes that the RevPAR increase was 3-percentage points higher than expected due to a higher-than-anticipated demand in the FIT and leisure segments. During the quarter, MGM Resorts continued room renovations at Bellagio. As a result, about 300 rooms were out of service at any given point in time. According to management, the selling rates for the renovated rooms are consistently $30 higher than the average ADR at Bellagio. The company has also begun a $160 million room remodel at MGM Grand, which is expected to result in a $10 to $20 increase in ADR at the property.

MGM Resorts International continues to support federal legislation to legalize online poker in the United States. Recently, the company announced an agreement with bwin.party and Boyd Gaming to form a jointly-owned online poker company in the United States, if the legislation is passed. The company notes that the partnership, which offers both scale and global brand names, will give it the best opportunity to capitalize on the online poker market.

Las Vegas Sands
Strong performances across all regions

Net revenues for Las Vegas Sands were reported at a record $2.4 billion in the third quarter of 2011, which represents a 26.2-percent increase over the same quarter last year. Adjusted EBITDA increased 43.2 percent to $924.1 million, representing the ninth consecutive quarter in which EBITDA has increased. The company's results are attributable to strong performances at its properties in Singapore (record adjusted EBITDA of $413.9 million and an EBITDA margin of 52.2 percent), Macau (adjusted EBITDA of $388.3 million and an EBITDA margin of 33.3 percent) and Las Vegas.

In Las Vegas, The Venetian and The Palazzo reported net revenues of $347.4 million during the third quarter of 2011, up 19.5 percent over the same period last year. Casino revenues were $124.3 million, representing a 6.6-percent increase when compared to the same period of 2010. Each of the properties' nongaming revenue sources reported increases as well. Room revenues were up 8.0 percent, attributable to a 9.8-percent increase in ADR and an occupancy rate of 92.7 percent. Meanwhile, food and beverage revenues were up 21.2 percent and retail and other revenues were up 16.1 percent year-over-year. The company's Las Vegas properties reported adjusted EBITDA of $94.3 million, representing a 61.7-percent increase. The company notes it benefitted from stronger group meeting and convention business during the third quarter.

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August 2011

Strong second quarter sparks hopes of continued improvements

As the national economy continued its slow recovery, every major hotel operator on the Las Vegas Strip - and nearly every property - reported improvements in net revenues, adjusted EBITDA and average daily rate (ADR) during the second quarter of 2011. With occupancy also up in most cases compared to a year ago, the significant improvements in ADR resulted in an increase in revenue per available unit (RevPAR) for almost every major operator. Some properties attributed the improvements to increased business from convention and group visitors, while others reported benefitting from an increasing number of international customers. According to the Las Vegas Convention and Visitors Authority, visitor volume was up 7.0 percent in June 2011 compared to the same month last year, while gaming revenue for the Las Vegas Strip increased a dramatic 32.3 percent. Average daily room rate was up 13.0 percent during the month, while the citywide occupancy rate rose 6.4-percentage points.

The Las Vegas Strip may soon face another change to its world-famous skyline, though this change will be sourced to an unusual event. MGM Resorts International recently submitted a plan to Clark County to implode Harmon Tower, the 27-story hotel tower which, unlike prior imploded Strip landmarks, has never housed a guest. Construction was halted on the luxury hotel and condominium tower after structural defects were reported in late 2008. MGM maintains the tower cannot be fixed and notes that implosion is the fastest and safest solution. Meanwhile, CityCenter's general contractor, Perini Building Company, says it can fix the Harmon Tower. The plan for implosion will have to be approved by the Clark County Building Department before a final decision is made.

Caesars Entertainment
Rated-player spend is up

Total net revenues for Caesars Entertainment increased a modest 0.4 percent in the second quarter of 2011, reaching $2.2 billion, while property EBITDA was up 15.2 percent, or from $470.2 million to $541.8 million. In Las Vegas, the company reported net revenues of $786.4 million and property EBITDA of $233.1 million, up 10.3 percent and 31.8 percent, respectively, over last year. The Las Vegas properties reported a modest 0.2-percent increase in visitation by rated players; however, spend per rated player trip increased 9.2 percent. The company notes that rated play accounted for 75 to 80 percent of casino revenues in the quarter. Also in Las Vegas, hotel revenues were up 9.5 percent in the second quarter, attributable to a 6.5-percent increase in average daily rate and a 3.6-percentage point increase in hotel occupancy.

The company notes that construction of Octavius Tower at Caesars Palace continues to progress with 662 rooms expected to open in December of 2011. In addition, significant developments were made in the planning and design of the LINQ retail, dining and entertainment center. Construction on the LINQ project is expected to begin in the fourth quarter of 2011. According to management, the structural and operational changes implemented by the company beginning in 2008 continue to contribute to cost savings. These changes, along with improvements in the performance of the Las Vegas properties, have resulted in the company's best quarterly gains in three years.

Penn National
Las Vegas locals market continuing to struggle

Penn National Gaming reported total net revenues of $687.9 million and adjusted EBITDA of $189.6 million in the second quarter of 2011, representing increases of 15.0 percent and 33.3 percent, respectively, when compared to the second quarter of last year. The company officially entered the Las Vegas market in the first quarter of 2011 with its acquisition of the M Resort, located ten miles south of the Las Vegas Strip. The property reported net revenues of $43.1 million and adjusted EBITDA of $4.3 million in the second quarter. When compared with its performance in the same period last year, during which time the M Resort remained under its previous ownership, these results represent an increase in net revenues of 2.9 percent, and a decrease in adjusted EBITDA of 6.1 percent.

The company notes that there are four market segments that drive the M Resort's performance; these include the Las Vegas locals market, Southern California traffic from Interstate 15, convention and group business and the Penn National regional database. While the property is benefitting from a strong convention and group segment, the most important driver of business for the M Resort, the Las Vegas locals market, continues to struggle according to management. However, Penn National believes the segment will get stronger in the future and will eventually provide the company with higher returns on its investment.

Boyd Gaming
Reports modest improvements in Downtown Las Vegas market

Boyd Gaming reported total net revenues of $574.4 million during the second quarter of 2011, which is a decrease of less than 1.0 percent when compared to the same period last year. Adjusted EBITDA increased from $113.5 million in the prior year quarter to $118.4 million, or 4.3 percent. Also during the quarter, Boyd's wholly-owned properties reported net revenues of $391.6 million, which represents essentially no change from last year. Management noted that net revenues were negatively impacted by the closure of Sam's Town Tunica for 25 days in May due to flooding along the Mississippi River. Adjusted EBITDA for the company's wholly-owned properties increased 13.1 percent to $79.8 million.

The Las Vegas Locals market reported a modest 0.8-percent decline in net revenue during the second quarter, which fell to $151.8 million. However, the market returned to year-over-year growth in terms of adjusted EBITDA, which increased 4.8 percent to $38.6 million. The company notes that The Orleans in particular continues to report strong operating performance, with the second quarter marking the third consecutive quarter of growth for the property. The Downtown market reported modest gains this quarter, with a 2.5-percent increase in net revenue and a slight 0.6-percent increase in adjusted EBITDA. The company notes that improved revenue performance within the Downtown market was nearly entirely offset by higher fuel costs associated with its Hawaiian charter service, which had an estimated $1.0 million negative impact on the segment's results.

Station Casinos
Completes plan of reorganization

Station Casinos announced on June 17, 2011 that it completed its plan of reorganization and emerged from bankruptcy. On August 9, 2010, Station Casinos LLC was formed to acquire all of the assets of Station Casinos, Inc. and its subsidiaries. In addition, the company acquired all of the assets of Green Valley Ranch Gaming, LLC and will continue to jointly own or manage several other properties, including Aliante Station. Standard and Poor's ratings service gave the reorganized company a "B" corporate credit rating, saying the outlook for the company was stable.

In its first quarter of adoption of "fresh-start reporting" in accordance with accepted accounting methods, which results in a new entity for reporting purposes, Station Casinos reported total net revenues of $298.8 million in the second quarter of 2011, an 8.5-percent increase over last year. Casino revenues increased 8.2 percent to $212.2 million, attributable to a 7.4-percent increase in slot revenue and a 17.7-percent increase in table game revenue. While average daily rate remained unchanged at $71 per night, occupancy increased 7.0-percentage points from 81.0 percent in the prior year quarter to 88.0 percent in second quarter 2011, resulting in a 7.9-percent increase in room revenues.

The Cosmopolitan
Maintains high occupancy but reports loss for second full quarter of operation

The Cosmopolitan of Las Vegas, owned and operated by Nevada Property 1, sits on 8.7 acres between the Bellagio and CityCenter. The property opened December 15, 2010 and recently completed its second full quarter of operations. Net revenues for The Cosmopolitan were $126.1 million in the second quarter of 2011, and management reported high demand for the resort's restaurants and rooms. Food and beverage revenues totaled $70.1 million in the second quarter, while room revenue was $45.9 million. Hotel occupancy was 91.4 percent and average daily room rate was $246 during the quarter, resulting in a RevPAR of $225.

Despite strong performances in the company's dining and lodging segments, the property reported a net loss of $54.3 million in the second quarter. The loss is partially attributable to the property's weak gaming performance, where casino revenues totaled $28.2 million compared to casino expenses of $25.0 million. The company noted that table games hold percentage during the quarter was 11.6 percent, which is less than the expected 12 percent to 15 percent. The Cosmopolitan is continuing development of the West Tower (Phase II), which should be completed by September 2011. Phase II will add 968 hotel and condominium-hotel style units to the Phase I total of 1,998 units. As of June 30, 2011, 2,518 rooms were completed and available.

Wynn Resorts
Positive impacts from increased international customers

Wynn Resorts reported total net revenues of $1.4 billion in the second quarter of 2011, a 32.4-percent improvement over the $1.0 billion reported in the second quarter of 2010, attributable to strong performances at both Wynn Macau and Wynn Las Vegas. Net revenues in Las Vegas were up 22.8 percent in the second quarter to $390.8, while adjusted EBITDA was up 103.7 percent. Although room occupancy fell 3.4 percentage points when compared to the second quarter of 2010, room revenues were up 15.5 percent during the quarter, due to a 22.1-percent increase in average daily rate. All non-casino areas reported increases compared to the prior year quarter; these included a 13.0-percent increase in food and beverage revenue, a 6.5-percent increase in retail revenue and a 22.0-percent increase in entertainment revenue attributable to additional shows by Garth Brooks. Chairman and CEO Steve Wynn notes the company is benefitting from increased patronage from its international customers, three-quarters of whom come from China.

Wynn Macau reported net revenues of $976.5 million in the second quarter of 2011, a 36.7-percent increase over last year. Adjusted EBITDA was reported at $314.3 million, which is a 45.4-percent increase from the same period in 2010. Management notes that because of the strong performance of its investments in China, the company has been able to strengthen its business and protect its employees in Las Vegas, such as through the investment of over $200 million toward renovations and additions at its Las Vegas hotels.

MGM Resorts International
RevPAR and ADR up for all Las Vegas Strip properties

Consolidated net revenues for MGM Resorts International were up 17.0 percent in the second quarter of 2011 to $1.8 billion, while adjusted property EBITDA for all properties and subsidiaries was up 47.1 percent to $410.7 million when compared to the same quarter of last year. The company's results are attributable to strong performances by its Macau and Las Vegas properties, as well as the fact that the current period includes net revenue related to MGM China ($193 million) following the company's acquisition of a controlling interest in MGM China during the quarter. The company's wholly-owned Las Vegas Strip resorts (excludes CityCenter) reported net revenues of $1.2 billion and adjusted EBITDA of $271.0 million, which represent increases of 5.0 percent and 11.2 percent, respectively. Hotel occupancy was up 1.0 percentage point in the quarter for wholly-owned Strip resorts, while average daily rate increased 9.6 percent to $126, resulting in a 10.7-percent increase in RevPAR (revenue per available room).

Aria, the only gaming property within the 50 percent-owned CityCenter, reported record net revenues of $233.0 million in the second quarter of 2011, an improvement of 48.2 percent compared to last year. Occupancy at the property was 90.0 percent, and the average daily rate was $202, resulting in a 28.0-percent increase in RevPAR to $181. Management noted that it expected Aria to perform slightly better in the quarter and believes the property's biggest weakness comes from its show, "Viva Elvis," which opened in February 2010. The show is currently only half occupied and contributes little to Aria's EBITDA. In January 2012, "Viva Elvis" will take an extended break as modifications are made to make the show more of an acrobatic Cirque du Soleil production.

Las Vegas Sands
Continues to report strong performances at home and abroad

Las Vegas Sands reported record results for yet another period in the second quarter of 2011. Company-wide, net revenue increased 47.1 percent to $2.4 billion. Meanwhile, adjusted EBITDA increased 90.4 percent to what management believes represents an industry record at $901.6 million, marking the eighth consecutive quarter in which adjusted EBITDA increased from quarter to quarter. Marina Bay Sands in Singapore and the Macau properties contributed substantially to the company's performance in the second quarter of 2011. Marina Bay Sands reported net revenue of $737.6 million and adjusted EBITDA of $405.4 million, resulting in an EBITDA margin of 55.0 percent. After continually reporting record results in its first year of existence, Chairman and CEO Sheldon Adelson commented that he believes the Marina Bay Sands is becoming the most successful integrated resort in the history of the hospitality, gaming and entertainment industry. The Macau properties reported a record adjusted EBITDA of $391.6 million with an EBITDA margin of 33.0 percent.

In Las Vegas, the Venetian and Palazzo generated $332.5 million in net revenue, which represents an 18.2-percent increase over the prior year quarter. The Las Vegas properties also reported adjusted EBITDA of $92.9 million, an improvement of 40.8 percent compared to the second quarter of 2010, and an EBITDA margin of 27.9 percent. The company notes that the second quarter results in Las Vegas reflect the implementation of a strategy to focus on cash-paying corporate group, convention and FIT customers while optimizing promotional activity for gaming customers. Due to the increased group meeting and convention business at the Las Vegas properties throughout the second quarter, cash revenues from hotel rooms increased 18.0 percent, and food and beverage revenues increased 12.4 percent.

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March 2011

First quarter results signal potential turning point in 2011

While challenging conditions persist in some segments of the Las Vegas market, the major Las Vegas Strip operators all had one thing in common during the first quarter of 2011: significant improvements in average daily room rate. Combined with increases in the average occupancy rate at many properties, nearly every major operator also reported an increase in revenue per available room (RevPAR). Several operators attributed the growth to improvements in convention mix as well as overall growth in meetings and conventions, while others noted that higher quality customers and rated players were contributing more to their bottom lines. Las Vegas visitor volume and convention visitation increased 5.6 percent and 10.3 percent, respectively, in March 2011, while the average daily room rate for the entire market as reported by the Las Vegas Convention and Visitors Authority rose 19.2 percent compared to the same month last year. In other major markets, properties in Macau and Singapore continue to report record results in terms of both revenue and EBITDA.

Although the legalization of online gaming by the federal government appears to be on hold after the indictment in April 2011 of executives at three of the largest online poker sites on charges of money laundering, bank fraud and operation of illegal gambling businesses; in late May the Nevada Senate Judiciary Committee approved Internet poker bill AB 258, which lawmakers say will make Nevada a licensing model if and when the federal government legalizes online gaming.

Caesars Entertainment
Rated-player visitation up in Las Vegas

Net revenues for Caesars Entertainment decreased 0.4 percent in the first quarter of 2011, or from $2.19 billion to $2.18 billion, when compared with the first quarter of 2010. Company-wide results were negatively impacted by reduced visitation by the company's rated players and temporary closures of four properties in the Illinois/Indiana region due to flooding; these declines were partially offset by the full-quarter impact of Planet Hollywood in Las Vegas, which was acquired by the company in February 2010. The company noted that strengthening fundamentals in the Las Vegas market prompted the decision to complete the Octavius tower at Caesars Palace and begin working on the LINQ retail, dining, and entertainment project. Management also stated that financing associated with the Octavius tower and the LINQ projects was completed early in the second quarter of 2011.

In Las Vegas, net revenues increased 6.4 percent in the first quarter of 2011, while EBITDA increased 1.3 percent. The company attributes this to increased visitation and consumer spending per trip. Specifically, visitation by rated players rose 8.7 percent compared to the prior year quarter, while the amount spent per rated-player trip increased 1.0 percent. In addition, the company reported a 7.6-percent increase in cash average daily room rates along with a 4.4-point increase in occupancy rate.


Enters Las Vegas market with M Resort

Penn National Gaming officially entered the Las Vegas market with its recent acquisition of The M Resort, an upscale locals and destination-oriented casino resort located ten miles south of the Las Vegas Strip. The company owns and operates gaming and racing facilities in regional markets across the U.S., including in Pennsylvania, Ohio, West Virginia, Maryland and New Jersey. In October 2010, Penn National purchased all of M Resort's $860 million bank debt from Bank of Scotland for $230.5 million. In February 2011, the company entered into an asset purchase agreement that provided for the conversion of this debt to equity, subject to regulatory approvals. On June 1, 2011, Penn National officially acquired M Resort. Penn notes that it has already helped improve occupancy, revenue and EBITDA for the M Resort by marketing to Penn's active player database and sending offers to some of its highest value players from regional markets, resulting in 2,500 incremental room nights.

While other changes may be on the horizon, Penn National decided to leave the M Resort's management in place. This includes Anthony Marnell III, who built the property and opened it in March 2009. Marnell will remain in charge of the property as president, while Penn National will supply various corporate services, including legal, public affairs, human resources and marketing oversight.

Boyd Gaming
Reports improvements in LV Downtown segment

Net revenues for Boyd Gaming decreased slightly (-1.5 percent) in the first quarter of 2011 when compared with the same period in 2010, while adjusted EBITDA fell 4.0 percent from $116.3 million to $111.7 million. The company reported an adjusted net loss of $1.2 million, or $0.01 per share, compared with earnings of $8.9 million, or $0.10 per share, last year. Meanwhile, Boyd's wholly-owned properties reported net revenues of $394.3 million for first quarter 2011, which represents a modest 0.5-percent decline compared to the prior year quarter. Also, wholly-owned property adjusted EBITDA increased 2.0 percent, or from $88.1 million to $89.9 million. The company notes that this is the first time its wholly-owned properties have achieved quarterly growth in adjusted EBITDA since the recession began and believes it signals a turning-point that will lead to future growth.

The company's Las Vegas locals market reported slight declines in net revenues and adjusted EBITDA of 1.3 percent and 2.0 percent, respectively. However, within this market, The Orleans had a particularly strong performance with the best quarterly comparison it has posted in three years. The Downtown market demonstrated improvements in its quarterly revenue and adjusted EBITDA, reporting a 3.1-percent increase in net revenues, and a 7.1-percent increase in adjusted EBITDA. The company is optimistic about its continued growth and recovery and cites continued improvement in the Las Vegas market, growth in convention and meeting business, and job market expansion as key reasons for this optimism.

MGM Resorts International
Reports LV Strip RevPAR improvements

MGM Resorts reported improvements in revenue and operating statistics during the first quarter of 2011 largely driven by increased hotel occupancy, room rates and convention and banquet revenue. Room revenue increased 13 percent compared to the prior year quarter, led by a 16-percent increase in Las Vegas Strip revenue per available room (RevPAR). Strip occupancy rose 2 points to 87 percent, while average daily room rate increased from $113 to $130. Adjusted property EBITDA attributable to wholly-owned operations increased 12 percent to $301 million. The company nearly tripled its share of operating income from MGM Macau, earning $62 million in the latest quarter. In addition, CityCenter losses significantly decreased from $119 million to $6 million. Overall, net revenue for the company increased 3 percent to $1.5 billion.

MGM Resorts notes that performance at its Las Vegas properties was driven by increased hotel occupancy and room rates, and the company expects to continue this upward performance by focusing its attention on the convention segment and developing an impressive events calendar that will allow it to take advantage of increased consumer spending. Convention room nights represented 20 percent of MGM Resorts' room bookings in the first quarter of 2011, up from 15 percent in the prior year quarter and the best convention mix quarter for the company since the first quarter of 2007. Event bookings have also increased significantly, and the company notes that with better events consumers tend to spend more money during their stay.

The Cosmopolitan
The Cosmopolitan completes first full quarter of operations

In September 2008, Nevada Property 1, an indirect wholly-owned subsidiary of Deutsche Bank, purchased what was at the time a hotel property under-construction for $1 billion at a foreclosure sale. Nevada Property 1 currently owns and operates the property as The Cosmopolitan of Las Vegas. The Cosmopolitan, which sits on 8.7 acres on the Las Vegas Strip between Bellagio and CityCenter, is valued at nearly $3 billion in Nevada Property 1's latest financial statements. It opened on December 15, 2010 and recently completed its first quarter of operations. Property amenities include 100,000 square feet of gaming space, including 1,478 slot machines and 77 table games; a 1,800-seat showroom; 2,284 hotel and condominium style hotel rooms with an additional 682 rooms expected to be completed by August; restaurants and lounges; the 56,000 square-foot Marquee Nightclub & Dayclub; 185,000 square feet of convention and banquet space; retail space and a spa, salon and fitness center.

Despite a healthy occupancy rate of 85.7 percent and ADR of $241 during the first quarter of 2011, The Cosmopolitan incurred a net loss of $56.8 million. Net revenues totaled $104.9 million while adjusted EBITDA was negative $8.3 million. The company notes that table game revenues increased steadily during the quarter. Also, it hopes to continue to develop its database of customers in quarters to come to increase slot machine play and strengthen loyalty program participation.

Station Casinos
Reorganization plan approved by NV Gaming Commission

Station Casinos reported a modest 0.6-percent decrease in net revenues company-wide during the first quarter of 2011 when compared with the same period last year. The company continues to work through details of its reorganization after filing petitions in the Bankruptcy Court under chapter 11 of the Bankruptcy Code on July 28, 2009. A reorganization plan was confirmed by the court on August 27, 2010, and on May 26, 2011, the Nevada Gaming Commission unanimously approved the restructuring plan, which keeps members of the founding Fertitta family in charge with a 45 percent ownership stake in the new organization.

Station Casinos significantly decreased its net losses in the first quarter of 2011, improving from $53.5 million to $11.8 million largely due to declines in non-operating expenses. The company reported hotel occupancy of 84 percent, which represents a 5-point increase over the first quarter of 2010. However, even with an increase in hotel occupancy, average daily room rate decreased 3.0 percent, or from $66 to $64. Meanwhile, food and beverage revenue increased 13.1 percent, the number of restaurant guests served increased 42.8 percent, and the average guest check decreased 15.9 percent. The company notes that these numbers were due to lower buffet prices, which attracted more diners. Casino revenues increased 1.7 percent compared to the prior year quarter, which was primarily attributed to an increase in slot promotional activities.

Wynn Resorts
Continues strong performances home and abroad

Wynn Resorts reported net revenues company-wide of $1.3 billion in the first quarter of 2011, an improvement over the $0.9 billion reported in the first quarter of 2010 largely due to the opening of Encore in Macau in April 2010 (not included in prior year results), as well as strong performances at both Wynn Macau and Wynn Las Vegas. In Macau, adjusted property EBITDA margin rose slightly while adjusted EBITDA grew 50.2 percent primarily due to the opening of Encore. Also in Macau, the average daily room rate increased from $282 to a current rate of $307, while the average occupancy rate declined from 90.7 percent to 88.6 percent, resulting in an increase in RevPAR of 6.3 percent.

Meanwhile, revenues for the Las Vegas properties were up 24.0 percent in first quarter of 2011, while adjusted EBITDA increased 119.1 percent. Average daily room rate increased 18.2 percent, or from $203 to $240, while the average occupancy rate declined from 89.4 percent to 87.9 percent, resulting in an increase in RevPAR of 16.6 percent. Chairman and CEO Steve Wynn noted that occupancy declines coupled with increases in room rates are a result of the company's focus on attracting higher quality customers who are more willing to pay a higher price for quality services. In addition, Wynn says the company's hotels are able to get higher rates because it constantly remodels and upgrades its rooms. The most recent of these remodels started at Wynn Las Vegas in April of 2010, five years after the hotel opened.

Las Vegas Sands
Continues record EBITDA margin in Singapore

Las Vegas Sands continued to demonstrate a strong performance in the first quarter of 2011. The company once again broke company-wide revenue and adjusted EBITDA records, reporting a 58.2-percent increase in revenue and a 101.0-percent increase in adjusted EBITDA. Again, the properties that contributed the most to these results were the Macau holdings and Marina Bay Sands in Singapore. In Macau, adjusted EBITDA increased 46.1 percent to $378.6 million with an EBITDA margin of 33.4 percent. The company expects to introduce its 13.7 million square foot resort on the Cotai Strip in early 2012, which will be the last major property to open in Macau for at least three years. Meanwhile, Marina Bay Sands generated $284.5 million in adjusted EBITDA with EBITDA margin of 48.6 percent.

Low hold rate on table games negatively impacted results at the company's Las Vegas properties by about $45 million in revenue. Also in Las Vegas, adjusted EBITDA declined 38.1-percent compared to the prior year quarter to $65.2 million. However, the company reported a 29-percent increase in cash revenues from the sale of hotel rooms and an 11.5-percent increase in food and beverage revenues due to increased meeting and convention business. The company also reported that 97 percent of occupied rooms during the quarter were sold to cash-paying customers, compared to only 68 percent in the prior year quarter. Sheldon Adelson, CEO of LVS, notes that the company's financial position is the best it has ever been, and it has multiple opportunities to optimize its capital structure for continued improvement.

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December 2010

Largest gaming operators end the year on mixed notes

Even as resorts with overseas operations continue to break revenue and EBITDA records in Macau, Las Vegas-focused operators such as MGM Resorts International, Caesars Entertainment, Boyd Gaming and Station Casinos still face challenges largely sourced to a pullback in consumer spending three years after the start of the latest recession. Nevertheless, the slow national economic recovery and a sense of optimism have caused many to speculate that it is only a matter of time before the increase in Las Vegas visitor volume reported for the better part of 2010 translates into increased profitability. In January 2011 alone, visitor volume in Las Vegas was up 8.6 percent compared to the same month last year. Some of this increase was due to large conventions scheduled in January as opposed to February, resulting in a 36.9-percent increase in convention attendance during the month. Notwithstanding the timing impact, the Consumer Electronics Show (CES) reported an 11.1-percent increase in attendance for a total of 140,000 attendees in 2011, potentially signaling a growth trend for other large shows this year.

A number of alliances between local gaming operators and Internet poker companies have dominated the news in recent weeks, with Caesars Entertainment (888 Holdings PLC), Wynn Resorts (PokerStars) and Station Casino founders (FullTilt Poker) all announcing partnerships and/or alliances to operate online poker sites should necessary legislation become law. Currently, online poker is illegal in all 50 states; however, legislation is currently on the table in Nevada and speculated at the federal level.

Las Vegas Sands
Prior-year comparisons are positive

The latest quarterly results for international gaming operator LVS continued to break revenue and EBITDA records for the company as properties in Macau and Singapore turned in strong results once again. The company reported net revenue of $2.02 billion, a record for the company and an increase of 56.9 percent compared to the $1.28 billion reported in the same quarter last year. In Singapore, the Marina Bay Sands, in its second full quarter of operations, again generated the highest quarterly adjusted property EBITDA ($305.8 million) and EBITDA margin (54.6 percent) from any single property in the history of the company. Due to strong demand for meeting space in the Singapore complex, LVS has announced that it will bid for any additional land that the Singapore government puts up for auction that would be suitable for expansion.

Also on the growth front, the company recently announced plans to build a $20 billion miniature Las Vegas Strip in either Madrid or Barcelona, Spain. However, materialization of "Euro Vegas" would require land concessions from the government and quick approval of building plans. Meanwhile, for the company's operations in Las Vegas, Nevada, net revenue was up 16.5 percent to $310.6 million for the quarter compared to last year due to increased sales in the food, beverage, and retail segments; adjusted property EBITDA rose 41.7 percent to $80.6 million and EBITDA margin increased 4.6 percentage points to 25.9 percent.

Wynn Resorts
Turns in strong results both home and abroad

Wynn reported net revenue of $1.2 billion in the fourth quarter of 2010 compared to $0.8 billion in the same quarter last year, with strong results in both Macau and Las Vegas contributing to the increase. The current year results also include Encore at Wynn Macau, which opened April 1, 2010. Including the newly opened Encore, revenue and EBITDA were up 79.4 percent and 108.9 percent, respectively, in Macau. Average daily room rate (ADR) increased from $271 to $303 for the same period, and occupancy increased from 90.6 percent to 92.3 percent for the company's Macau operations.

In Las Vegas, revenue and EBITDA were up 8.0 percent and 25.0 percent, respectively; ADR rose from $219 for the fourth quarter of 2009 to $235 in the latest quarter, while occupancy rose 0.8 percentage points to 81.8 percent. On the expansion front, the company hopes to begin groundwork on its planned third Macau resort in the Cotai area in early 2011.

Chairman and chief executive officer Steve Wynn also said he has changed his mind about not investing in any more U.S. projects due to what he believed were uncertain and unfavorable fiscal conditions, but he did not announce any specific projects that may be planned. Also in early 2011, Wynn announced a partnership with PokerStars, the world's largest online poker business, to operate a U.S.-based online poker site if federal legislation is passed.

Caesars Entertainment
Internet gaming partner approved

Caesars Entertainment (formerly Harrah's Entertainment) reported same store net revenue growth in the Las Vegas region of 0.9 percent in the fourth quarter of 2010 compared to the same quarter last year. Including Planet Hollywood, which was acquired in the first quarter of 2010, fourth quarter revenues increased 11.9 percent year-over-year for the company's nine Las Vegas region properties. Companywide, quarterly net revenues increased 1.0 percent to $2.1 billion and adjusted EBITDA rose 5.1 percent to $439.9 million. However, the company reported a net loss of $194.0 million for the latest quarter due to declining operating income and increased impairment charges, compared to net income of $298.3 million in the same quarter prior year. Recently, the company announced it would seek $450 million in financing to complete the 660-room Octavius hotel tower and build Project Linq: a retail, dining and entertainment corridor between Imperial Palace and Flamingo Las Vegas that would include a 550-foot observation wheel which is likened by management to the London Eye.

The company made headlines in recent weeks when Nevada gaming regulators approved a business relationship between Caesars and 888 Holdings PLC, a Gibraltar company that offers online wagering in the United Kingdom, France and Italy. The vote marks the first relationship approved by regulators for a Nevada licensee with a foreign Internet gaming provider. Caesars commented that it would continue to utilize its World Series of Poker and Caesars brands in overseas markets through its relationship with 888; management also noted that it believes the approval is an important step towards the eventual legalization of Internet gaming in the U.S.

Boyd Gaming
Fourth quarter comparisons improve

Boyd Gaming reported a net loss of $7.1 million, or $0.08 per share (adjusted loss of $3.9 million or $0.05 per share) in the fourth quarter of 2010, compared to a net loss of $1.0 million, or $0.01 per share in the prior year quarter. Net revenues fell a modest 1.5 percent to $551.9 million for the quarter, while adjusted EBITDA declined 3.1 percent to $100.0 million. The company noted that it had expected fourth quarter comparisons to be the best of the year, and that expectation materialized. Management cited improving business conditions and consumer confidence levels through the end of 2010 and notes that it anticipates the recovery will gain momentum into 2011.

Notably, Boyd's Las Vegas Locals (non-downtown) segment reported its best year-over-year comparisons in 12 quarters, with adjusted EBITDA stabilizing at levels consistent with the prior year and net revenue declining by a modest 1.9 percent. The company's Downtown Las Vegas segment reported a 1.6-percent decline in net revenue and a slightly larger decline in adjusted EBITDA, as results were negatively impacted by the company's Hawaiian charter operation.

MGM Resorts International
Narrows net loss in final quarter of 2010

MGM Resorts narrowed its net loss in the final quarter of 2010 to $139.2 million or $0.29 per share, an improvement from a loss of $433.9 million or $0.98 per share in the same quarter of last year. MGM Macau, which is 50-percent owned by the company, reported record results in terms of operating income during the quarter. Companywide, net revenue increased one percent to $1.5 billion for the fourth quarter of 2010 compared to the prior year quarter; excluding reimbursed costs mainly related to the company's management of CityCenter, net revenue decreased one percent.

The company notes that it has made significant improvements in its balance sheet during the past year through capital raises and the extension of debt maturities at MGM Resorts, MGM Macau and CityCenter. In early 2011, the company rolled out its new customer loyalty program, M life, which allows guests to accumulate points not only on gambling but on total resort stay expenditures.

Station Casinos
Ends 2010 with a $0.6 billion loss

Although Station Casinos' reorganization plan was confirmed by the Bankruptcy Court in August 2010, the plan has yet to be consummated and uncertainty surrounding the eventual outcome of the Chapter 11 case continues to strain company time and resources. The operator's annual report notes substantial doubt still exists about the company's ability to continue as a going concern, primarily sourced to its pre-petition financial obligations. Nevertheless, the heavily Las Vegas localsbased operation continues to move forward. During the first quarter, the company announced that it would be filling more than 1,000 jobs throughout the company, including positions in food and beverage, hotel management, dealers, slot service ambassadors and security. The company continues to focus on customer service with its "We Love Locals" campaign, offering everything from deals for local residents to freshly-baked cookies on the casino floor.

The company expects that once the reorganization plan is consummated, Station Casinos LLC ("New Station") and its subsidiaries will enter into a long-term management contract with affiliates of Fertitta Entertainment to manage the company's properties. In other news involving company executives, Fertitta Interactive (not directly tied to Station Casinos but owned by members of Station's founding family and other partners) announced a partnership with Internet poker giant FullTilt Poker to operate an online poker site if potential federal legislation is passed.

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September 2010

October surge in Las Vegas gaming revenue piques hopes for a strong fourth quarter of 2010

Gaming revenue on the Las Vegas Strip increased 16 percent in October compared to the same month in the prior year, accelerating a year-over-year gain of 2.8 percent witnessed in September. During third quarter earnings calls held in October and November, several operators noted that it appears trends are stabilizing and that the worst has passed. October's especially strong gaming revenue results (following two previous monthly increases) add credibility to the notion that the Las Vegas hotel-casino industry has turned the corner, leaving behind two years of bankruptcies, near-bankruptcies, liquidity crises and speculation that the industry was on its death bed. While discretionary spending by consumers is still down relative to peak levels, operators such as MGM Resorts International noted that visitors seem to be opening their wallets a bit more when coming to town for a special event or a holiday weekend.

Operators catering to the local gaming market, which continues to report more challenging conditions, are likely to begin to report more positive results in the coming quarters if spending continues to pick up on the Strip. Local operator Boyd Gaming noted that declines in revenues and EBITDA in the third quarter of 2010 were the smallest since the third quarter of 2009, leading management to believe business is stabilizing. Meanwhile, operators with properties in Macau continue to report exceptionally strong results. In Singapore, Las Vegas Sands' Marina Bay Sands reported adjusted property EBITDA of $241.6 million and an EBITDA margin of 49.7 percent, both records for any single property in the history of the company.

Las Vegas Sands
Singapore property breaks records in first full quarter of operations

International gaming operator Las Vegas Sands reported net revenue of $1.9 billion, a record for the company and an increase of 67.3 percent compared to the $1.1 billion reported in the same quarter last year. Marina Bay Sands, in its first full quarter of operations, contributed $485.9 million in net revenue. The Singapore property reported adjusted property EBITDA of $241.6 million and EBITDA margin of 49.7 percent, both records for any single property in the history of the company.

According to management, in Las Vegas, average daily room rate is "lagging" but group demand into future quarters is strong. The company noted it has "mixed" feelings about Las Vegas in 2011. The Venetian Las Vegas and The Palazzo, which will soon be affiliated with IHG's InterContinental Brand according to a late-October announcement, reported improvements in occupancy (5.3 percentage-point increase), net revenues (26.9-percent increase), adjusted property EBITDA (69.0-percent increase) and EBITDA margin (5.0 percentage-point increase). Average daily room rate declined 2.9 percent to $166 at Venetian but increased 6.3-percent to $185 at Palazzo. Also in Las Vegas, the company reported an increase of 10.9 percent in table games drop, as well as a 5-point increase in table games win percentage (to 17.1 percent) compared to the same quarter prior year.

Caesars Entertainment
Harrah's renames itself to reflect luxury brand

In late November, Harrah's Entertainment, Inc. officially changed its name to Caesars Entertainment Corporation in recognition of Caesars' status as the world's "preeminent and most respected casino brand," according to the company. Management announced that the name Harrah's will remain one of the company's primary brands, along with Caesars, Horseshoe, Total Rewards and World Series of Poker. The company, which continues to face liquidity challenges, filed a registration statement in October to commence the process of selling equities in the public market, but subsequently cancelled those plans. Caesars has not been publicly traded since its privatization in early 2008. The offering was scheduled to raise as much as $575 million for the company for development projects.

In Las Vegas, management reported that hotel occupancy remained in the mid-90 percent range during the third quarter, but that same-store revenue declined 1.9 percent compared to the prior year quarter due to lower spend per visitor. Total revenues increased 8.4 percent in the Las Vegas region due to the February 2010 acquisition of Planet Hollywood. Gary Loveman, chairman, president and chief executive officer noted that while there are signs that consumer spending may be stabilizing, the company continues to exercise cost discipline while pursuing innovative ways to provide rewarding customer experiences.

Wynn Resorts
Declares Las Vegas has seen the bottom

In the opening remarks of the Wynn Resorts third quarter earnings call, Steve Wynn, chairman and CEO stated, "This is the first time in the conference call that I am going to say I believe that we have seen the bottom in Las Vegas and I don't know how fast this is going to get better, but I don't think it is going to get any worse...we had a really nice October too..." Management later commented that convention and group business continues to improve in Las Vegas and that levels of committed business on the books are significantly higher than they were at this time last year. The company expects the convention segment to return to between 18 and 19 percent of overall occupancy in the coming months, a level more in line with historical norms.

Net revenues for Wynn Resorts' Las Vegas operations increased 3.1-percent in the third quarter of 2010 compared to the same quarter prior year. Specifically, for the quarter, net casino revenues were down 3.9 percent, with table game drop up 5.2 percent and slot machine handle down 18.8 percent. Non-casino revenues were up 6.3 percent, driven primarily by the company's nightclub operations, including the recently opened Encore Beach Club and Surrender nightclub. Retail revenues declined 1.8-percent compared to the same quarter prior year.

Boyd Gaming
Reports stabilization; expects Q4 results to be most favorable comparisons of the year

Boyd Gaming reported a decline of 4.1 percent in net revenues for the quarter, or $595.4 million compared to $620.8 million in the prior year (adjusted to reflect the consolidation of Borgata in the prior year). The company noted that while the net effect of certain pre-tax items decreased income in the current quarter, the opposite was true in the prior year quarter, thus leading to unfavorable year-over-year comparisons. Nevertheless, the company reported that declines in revenues and EBITDA in the third quarter of 2010 were the smallest since the third quarter of 2009, leading management to believe business is stabilizing.

In Las Vegas, the company's Locals segment reported a 3.4-percent decline in net revenues and a 16.7-percent decline in adjusted EBITDA; the Downtown segment reported a 5.4-percent decline in net revenues and a 34.7-percent decline in adjusted EBITDA. In October, Boyd announced it would not exercise its option to match the offer MGM Resorts International received for its non-controlling half-interest in the Borgata property, meaning Boyd will gain a new partner: Los Angeles-based private equity firm Leonard Green & Partners. Also during the month, in an effort to improve the condition of its debt portfolio, the company announced an offering of $500 million aggregate principal amount of 8-year notes in a private placement transaction (due 2018), the proceeds of which it intends to use to finance a tender offer for its outstanding senior subordinated notes due 2012, as well as for other refinancing and corporate purposes. In late November, the company announced that it successfully purchased 58 percent of the outstanding notes due 2012 (excluding notes held by the company and its affiliates).

MGM Resorts International
Moves to shore up balance sheet

MGM Resorts International reported net revenues of $1.56 billion during the third quarter, a slight increase over the prior year quarter's $1.53 billion. Excluding reimbursed costs mainly related to the company's management of CityCenter, net revenue was $1.47 billion, a decrease of approximately 3 percent compared to the same quarter of the prior year. The company's Las Vegas Strip properties reported mixed results when compared to the prior year, but company chairman and CEO, Jim Murren noted that "we're very happy to say that the trends have continued to stabilize and we have finally seen some pockets of absolute strength." Murren also noted that they have seen domestic customers "lighting up a bit when they come out for special events," such as concerts, a holiday weekend or a big conference.

In recent months, MGM has taken a number of steps to improve its balance sheet. The company issued $500 million in 10-percent senior notes due 2016 (approximately $486 million in net proceeds), with proceeds expected to retire obligations under its senior credit facility. MGM also completed an offering of 40.9 million shares of common stock resulting in net proceeds of approximately $511 million ($12.65 per share), also intended to repay debt. The latest moves provide additional breathing room into 2013 with regard to debt maturities. MGM received an offer for its 50-percent interest in the Borgata Hotel Casino & Spa based on an enterprise value of $1.35 billion for the entire asset. The offer equates to slightly more than $250 million in cash for MGM's interest. Also of note, the company sold land leases underlying the Borgata that are expected to net $71 million. The company continues to test the waters for an IPO in China.

Station Casinos
Moves forward with reorganization

Station Casinos moved forward with reorganization plans during the quarter, reporting an 11.2-percent decline in net revenue compared to the same quarter prior year. The company reported $227.0 million in net revenue for the three months ended September 30, 2010 compared to $255.7 million in the prior year quarter. Adjusted EBITDA declined 19.9-percent or from $61.4 million to $49.2 million in the latest quarter. The company-wide occupancy rate fell from 84 percent in the prior year quarter to 81 percent, while the average daily room rate declined $1 to $60 in the latest quarter. Also during the quarter, the company recorded net reorganization expense of $21.3 million.

The company announced in November that several veteran gaming executives would be joining the team as it emerged from bankruptcy, including Stephen Greathouse (representing JPMorgan Chase Bank) and Robert Cashell, Jr. (representing Deutsche Bank). Station Casinos LLC is controlled by the founding Fertitta family, Frank Fertitta III and his brother Lorenzo Fertitta; and key lenders JPMorgan and Deutsche Bank. Greathouse was previously an executive at Mandalay Resort Group and Harrah's Entertainment, among others, while Cashell has experience with a number of gaming properties in northern Nevada.

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June 2010

Past performances mixed as forecasts in fundamentals are positive

Second quarter conference calls held throughout July and August sounded, unfortunately, much like first quarter calls: hotel-casino operators generally remain optimistic about 2010 though many are beginning to acknowledge the "peculiarities" of the Las Vegas market, properties in Macau continue to break records and increases in forward convention bookings have many encouraged by the resulting expected improvement in mix. Challenging conditions have persisted for the majority of operators, who continue to report declining revenue on a same-store basis compared to the same quarter of the prior year, as well as declining EBITDA and EBITDA margin, save the Las Vegas Hilton, which has turned less negative, and MGM Resorts' Monte Carlo, which is somewhat of an anomaly as it abuts CityCenter and has benefitted from increased foot traffic. Wynn Resorts reported a narrow run-up in net revenues, though the improvement was due largely to its trendy nightclub Surrender and the recently-opened adjoining Beach Club (pictured below).

As the region awaits sustained, meaningful improvements in the national economy, overall performance continues to fluctuate from about even to down year-over-year. Some operators have suggested that the consumer today is quicker to react to bad news, while others suggest that the heated political environment heading up to the elections is impacting business. Steve Wynn raised concern about the Financial Reform Act signed into law in July, stating that "there isn't one single person in the United States of America that has a clue of where the Financial Reform Act will lead and what it really means." In fact, many of the provisions of the law will not take effect for at least a year as regulators have yet to write many of the new rules that will ultimately be implemented. Despite potential political and regulatory challenges ahead, with the health of the U.S. economy central to the performance of both the national and locals-oriented gaming markets in Las Vegas, most operators remain hopeful that a clear and consistent recovery will begin to take hold during the latter half the year.

MGM Resorts International
Says June could signal a turning point

MGM Resorts International noted that this past June was an "important month" for the company, as it was the first since October 2007 that RevPAR for its Strip resorts was up year-over-year. Average daily room rate was also noted to be up during the same month. Noting especially encouraging results from the higher-end properties in the company's portfolio, Jim Murren, Chairman and CEO remarked, "Typically, when luxury properties do well from a RevPAR perspective, it leads to improvements in our mid-market properties." Unfortunately, positive results for the third month of the quarter were not quite enough to reverse a general trend of year-over-year declines that have persisted into 2010 for the Las Vegas-focused operator, which relies to a large extent on domestic visitation. The company noted that while international business helped bolster baccarat drop during the quarter (up 20 percent for MGM Strip properties in June), the company's domestic business remained challenged. That said, management noted that during the second quarter, convention room mix was up 2 percentage points over the prior year (to 13 percent), in contrast to the first quarter, which was flat year-over-year. Convention business is essential to the company's ability to yield-up the rest of the portfolio. The company noted that the uptick in convention business was having a positive effect on certain ancillary businesses, such as catering, which reported revenue growth of 27 percent year-over-yearfor the quarter. Looking forward to 2011, the company noted that convention room rates are 15 to 20-percent higher than current rates. An "unusually" low hold percentage at Aria, as well as at other of the company's properties, also adversely affected quarterly results. The company noted that had it achieved normal hold percentages across Strip properties, excluding Aria, EBITDA would have been approximately $20 million higher than reported. Also during the quarter, the company recorded a $1.1 billion non-cash impairment charge related to CityCenter, which reduced the carrying value of the project on the company's books to $1.5 billion.

Wynn Resorts
Non-casino, non-room revenues drive increase

Wynn Resorts reported a 1.7-percent increase in net revenues for its Las Vegas operations in the second quarter, one of only a few operators to do so in Las Vegas on a same-store basis. However, the growth was largely attributed to higher revenues from the company's upscale nightclubs, such as the new Surrender, as well as its recently opened Beach Club. EBITDA declined 13.7 percent due to higher healthcare and other employee benefit costs, customer acquisition expenses and general repair and maintenance costs, according to the company. Net casino revenues declined 5.8-percent year-over-year due to the combination of a 1.8-percent decline in table games drop, a decline in table games win percentage to 20.0 percent (expected range of 21 to 24 percent) and a decrease of 1.6-percent in net slot win (despite a much larger -percent decline in slot machine handle). Room revenues were down 3.2 percent year-over-year as average daily room rate declined from $218 in the second quarter of 2009 to $197 in the latest quarter.

Company founder, chairman and chief executive officer Steve Wynn noted that business is "slightly better in Las Vegas" and that the company is noticing some improvement as it works on its hotel mix. Regarding the outlook for Las Vegas, Wynn commented, "We hope for continued improvement in Las Vegas...put differently...we hope that we'll get smarter in Las Vegas in dealing with the peculiarities of this market and this very, very mercurial national...economy that we're living with. The national economy and the political environment in the country as we head up to the elections is very, very touchy. And it is impacting all businesses." The company also noted that Las Vegas is beginning to benefit from referral business from Macau as many visitors from China and Asia want to experience the company's Las Vegas properties after having exposure to those in Macau.

Las Vegas Sands
Net revenue declines for Las Vegas operations while "record results" continue in Macau

Reversing year-over-year growth experienced in the first quarter of 2010, The Venetian Las Vegas and The Palazzo reported combined net revenues of $276.2 million compared to $291.9 million in the same quarter of the previous year. The company noted that the quarter's operating results were negatively impacted by a low table games win percentage of 13.8 percent, which was lower than the 19.3 percent reported in the same quarter in 2009 as well as the properties' trailing-12 month average of 18.3 percent. The company continued to post "record results" in terms of EBITDA and net revenues company-wide due to strong performance overseas. LVS reported a record $307.0 million of adjusted property EBITDA for its three properties in Macau, compared to $66.0 million for its two properties in Las Vegas. In Singapore, the Marina Bay Sands generated $94 million in EBITDA and an EBITDA margin of 43.7 percent in its first 65 days of operation.

The company's outlook on the Las Vegas market is similar to its competitors. On the positive side, management noted strong occupancy (upwards of 97 percent for both properties), healthy gaming volumes and continued improvement in the pace of group bookings, with 2011 looking stronger than 2010. The company noted that rates are under pressure in the group business, but it expects conditions to improve over time as business expands and the economic recovery continues. Harrah's Entertainment
Reports group business is recovering

Despite same-store revenue declines of 8.2 percent in the Las Vegas region during the second quarter, Harrah's Entertainment reported that group business began to recover during the period. Management expects group business to continue to outperform 2009 for the rest of the year. Including Planet Hollywood, which was acquired by the company during the first quarter of 2010, net revenues in the Las Vegas region increased 1.1 percent. Same-store revenue declines were attributed to both lower room rates due to increased room inventory in the market, as well as lower spend per visitor. The company also noted that cost reductions were unable to prevent margin declines. Property EBITDA for the company's entire portfolio of Las Vegas region properties declined 16.0 percent compared to the same quarter in the prior year. Consistent with the prior several quarters, Harrah's reported that hotel occupancy remained strong in the mid-90 percent range.

Gary Loveman, chairman, chief executive officer and president, commented on economic conditions generally: "[A]fter two years of the worst economic downturn since the Great Depression, it appears that year-over-year revenue declines are moderating in virtually all of our markets." During the second quarter, the company issued $750 million in second-priority senior secured notes due 2018, using the proceeds to redeem notes due 2010 and 2011. In another major announcement, the company reported that affiliates of Apollo Management VI, TPG Capital and Paulson & Co. will exchange $1.1 billion in debt for approximately 15.6 percent of Harrah's common equity, subject to regulatory approvals and certain other conditions.

Boyd Gaming
Notes today's consumer is "fragile"

Boyd Gaming continues to believe that year-over-year growth is achievable by the end of the current year, though management noted that fluctuations in May and June, which resulted in single-digit declines in revenue in both the Las Vegas locals and downtown markets, may continue as today's consumer appears markedly more "fragile." Keith Smith, president and chief executive officer, noted "While there's diversion in the federal deficit, volatility in the stock market, the European debt crisis, or stubbornly high unemployment, the consumer is reacting more quickly to the news than ever before. Their current reaction has been to pullback on their spending. The severity and length of this recession has clearly had a profound effect on consumer behavior."

The company noted that for the fourth consecutive quarter, the Las Vegas locals market has exhibited normal seasonality patterns, a sign of relative stabilization. Revenues in the locals segment remain down 7.9 percent year-over-year. The company's downtown segment showed sequential quarterly improvement in terms of both revenue (down 4.2 percent in the latest quarter compared to 7.9 percent in the previous quarter) and EBITDA (down 21.1 percent compared to 37.3 percent for the same periods), despite continued lower spend per visitor and reduced visitor volume. Regarding the outlook for local conditions, Boyd notes that despite worsening unemployment, consumer behavior has long since adjusted to general uncertainty and it is not likely to deteriorate further; in addition, retirees, which are a large part of the locals market, tend to rely more on the value of retirement funds, which depend more on the condition of the national, rather than the local, economy.

Station Casinos
Fertitta family likely to remain in control after winning auction with "stalking horse" bid

Feeling the impact of prolonged weakness in the locals gaming market, Station Casinos' perfomance deteriorated during the second quarter of the year as it widened an 11.8-percent year-over-year decline in net revenues during the first quarter of 2010 to a decline of 12.6-percent in the second quarter. Occupancy rates followed the same negative trend, falling by 7 percentage-points in the second quarter compared to a 6-percentage-point decline during the first three months of 2010. The average daily room rate declined 10.1-percent or to $62 from $69 in the same quarter of the prior year. When combined with falling occupancy rates, the lower room rates resulted in a 17.4-percent decline in calculated RevPAR. The company reported decreasing revenues compared to the prior year across its lines of business, including food and beverage (-18.8 percent), room revenues (-15.7 percent) and casino revenues (-12.3 percent). Overall, EBITDA declined 22.5 percent compared to the second quarter of 2009.

Meanwhile, the company's ongoing Chapter 11 reorganization reached a critical point in early August as members of the Fertitta family and their lenders prevailed in the auction of 11 casinos put up for sale with their "stalking horse" bid of $772 million. If settlement with independent lenders and final court approvals go smoothly, the Fertitta family will retain control of all Station Casinos' properties. Media reports suggest the case could be wrapped up in a matter of weeks.

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March 2010

Challenging conditions persist on the Las Vegas Strip

During first quarter conference calls held throughout April and May, hotel-casino operators generally remained optimistic about 2010, focusing attention on specific areas reporting growth, continued record results in Macau and increases in forward convention bookings. However, it is hard to ignore the fact that the majority of properties reported declines in the first quarter of 2010 as compared to the same quarter in the prior year. Reflecting back on the first quarter of 2009, which was characterized by many as disastrous, it is somewhat discouraging to note that most operators are reporting lower net revenues, EBITDA, and average daily room rates now than they were then. Sequentially (when comparing this quarter's year-over-year declines to those of the preceding several quarters), the results have trended somewhat more favorably.

A minority of operators reported improvement compared to the prior period, including Hard Rock Hotel, whose first quarter 2010 performance includes results from its recent 864-room expansion project. In June 2009, 490 rooms opened, and in December 2009, the remaining 374 came on-line. Wynn Las Vegas and Encore at Wynn Las Vegas, as well as The Venetian Las Vegas and The Palazzo also reported increased year-over-year net revenues and EBITDA, though these increases were primarily attributed to an uptick in gaming revenue. For many operators, the ability to raise room rates is key to financial performances going forward, and that ability will depend on increased demand from mid-week convention visitors and higher spend tolerance from leisure travelers. Notably, visitor volume has been up over the prior year during the past several months. Most predict improved consumer spending trends in the latter half of 2010, with the health of the U.S. economy central to that outcome.

MGM MIRAGE
Says Las Vegas market is "healing"

MGM MIRAGE, whose name will change in June (subject to shareholder approval) to "MGM Resorts International" to better reflect the company's growing international presence, reported challenging conditions continue in domestic play and consumer spending trends. However, the company noted that the market is "healing" and that during the first quarter, show ticket sales, fine dining covers and mid-scale restaurant revenue were all up year-over-year; from a broader perspective, visitation was up nearly 2 percent, a remarkable statistic given that city-wide convention business was down over 8 percent. That said, the current mix of visitors continues to impact the company negatively as the average daily room rate for convention visitors is approximately $140, while the leisure visitor averages in the $80 range. As the mix shifts back towards convention visitors (their target is 16 percent; in 2009 this percentage was 11 percent), the company notes that the profit impact will be profound. Specifically, the company noted a 1-percent increase in its Strip hotel occupancy rate (excluding CityCenter) would result in a $36 million annual EBITDA impact. Similarly, a $5 jump in ADR would equate to $54 million in EBITDA annually. Within CityCenter, Aria reported occupancy of 56 percent, 63 percent, 70 percent and 69 percent during January, February, March and April, respectively. The average for the first full quarter of operation was 63 percent; the average daily room rate was $194 (compared to $199 at Bellagio). The company is forecasting 80 percent occupancy for May, and noted that to be profitable, it does not need to raise rates; rather, occupancy at Aria needs to be at 75 percent.

Wynn Resorts
Instituted first quarter dividend of $0.25/share

Wynn Resorts' Las Vegas operations reported growth rates of 9.3 percent and 37.5 percent in net revenue and adjusted property EBITDA, respectively, despite flat occupancy and a decline of 8.6 percent in average daily room rate in the first quarter of 2010 compared to the same quarter in the prior year. Revenue increases were mainly attributed to an 18.8-percent increase in net casino revenues (to $139.5 million), which resulted from the combination of an increase in table games drop (up 7.1 percent) and an increase in table game hold percentage (up from 17.7 percent in the first quarter of 2009 to 23.2 percent in the first quarter of 2010). Entertainment revenues increased 42.2 percent (to $18.2 million) primarily due to Garth Brooks' performance's which began in December 2009. Hotel revenues fell 8.8 percent (to $77.6 million).

Recent developments include the April 21, 2010 opening of Encore at Wynn Macau, which includes 410 luxury suites, four villas, restaurants, high-end retail and gaming space. Steve Wynn, chairman and chief executive officer, commented on the explosive growth in Macau, where nearly 65 percent of the company's revenue is currently derived, "To Chinese people, part of the good life is going to Macau and partaking of all the excitement and activities that take place there." Regarding the Chinese government, he noted, "The desire for a consumer experience...is encouraged by the government...so it is not considered improper to want to aspire to the good life." However, Wynn noted that the government does not encourage lower-income citizens to go to Macau, only those that can afford it. The company added that its next project will be in China, unless it gets involved in Massachusetts first.

Las Vegas Sands
Secures $1.75 billion in Cotai Strip project financing

The first quarter of 2010 marks the first one in which full-quarter comparisons can be made for both of the company's existing Las Vegas properties: The Venetian Las Vegas and The Palazzo. In the latest quarter, the company's Las Vegas operations reported improved occupancy rates (91.3 percent compared to 90.7 percent in the first quarter of 2009) but a 3.3-percent decline in room rates (to $207 from $214). Net revenues increased 2.2 percent, while EBITDA increased 17.3 percent. The company attributed the growth in revenues to record volumes in the gaming portion of its business, and believes room pricing will improve over time as its competitors raise prices as the economic recovery continues.

The company announced in late May that it had successfully closed on $1.75 billion in project financing to complete construction of the 6,000-room combined Shangri-La, Traders and Sheraton resort complex (also called parcels 5 & 6) at the company's Cotai Strip development in Macau. The first phase of the project, which includes 3,700 rooms, retail, gaming and meeting/convention facilities is expected to open in the third quarter of 2011.

Harrah's Entertainment
Acquires Planet Hollywood; notes conditions remain challenging

Consistent with the prior quarter, Harrah's Entertainment reported that hotel occupancy in the Las Vegas region remained strong at 90 percent, though on a same-store basis (not including the recently-acquired Planet Hollywood), net revenues in the region declined 4.4 percent. The company attributed the decline to increased room inventory in the market, continued weakness in the group travel business, lower spend per visitor and lower average daily room rates, although the company did not elaborate on specific trends or actual room rates realized. Including Planet Hollywood, the company's Las Vegas portfolio reported a 0.5-percent decline in net revenues and a 3.9-percent decline in property EBITDA.

On a positive note, Gary Loveman, chairman, president and chief executive officer commented that new sales initiatives piloted in Las Vegas have shown encouraging results and are being expanding to 10 additional properties around the country. That said, Mr. Loveman tempered his optimism by reiterating that the company continues to face challenging conditions generally, including reduced discretionary spending by consumers and reduced aggregate demand. The company noted that cost-saving initiatives were unable to offset the decline in revenue during the first quarter, though improved cost structures should benefit the company going forward as demand returns.

Boyd Gaming
Anticipates growth in Las Vegas in late 2010

Boyd Gaming reported consistent year-over-year declines in net revenue across its markets: -8.0 percent in the Las Vegas locals' market; -7.9 percent in the Las Vegas downtown market; and -8.9 percent in the Midwest and South. Adjusted EBITDA dropped more sharply, or by 10.8 percent in the local's market, 37.3 percent downtown, 19.7 percent in the company's Midwestern and Southern markets and 18.1 percent overall. On a positive note, the company reversed a $13.8-million loss in the first quarter of 2009 to net income of $8.4 million in the latest quarter, though this was mainly due to decreased write-downs, interest expense and other charges.

The company noted it is a "much leaner, more efficient company than it was two years ago, and [it is] now able to generate substantial increases in EBITDA even with moderate increases in revenue." It anticipates year-over-year growth in Las Vegas later in 2010. In that vein, Boyd remains an interested party in the Station Casinos' reorganization (as creditor, competitor, and potential bidder).

Meanwhile, regarding Atlantic City's Borgata, the company reported that there have been no developments regarding whether it will take over MGM MIRAGE's half interest in the Borgata property or whether it will be taking on a new partner (the identities of potential new partners were also not disclosed). When questioned, Boyd noted that at the present time, it has no interest in taking over the entire property, yet they remain in the driver's seat due to their first rights in any transaction.

Station Casinos
Occupancy down; reorganization continues

Station Casinos reported an 11.8-percent decline in net revenues and a 6-percentage point decline in occupancy as it continued to feel the impact of the weak Las Vegas and U.S. economies. In the first quarter of 2010, occupancy decreased to 79 percent from 85 percent in the same quarter in the prior year, while average daily room rate fell from $71 to $66. The company also reported a decrease in food and beverage revenues of 25.2 percent, which was primarily attributed to the conversion of several owned outlets to leased outlets, and the closure of lower priced restaurants. Casino revenues declined 11.2 percent during the same period.

Meanwhile, developments regarding the Chapter 11 reorganization under the U.S. Bankruptcy Code continue. Minority lenders and unsecured bondholders recently filed new objections to the joint plan of reorganization filed by the debtors, which they believe benefits the founding Fertitta family, but several days later U.S. Bankruptcy Court Judge Gregg Zive gave his initial approval regarding the proposal to split the 18-casino company into two entities and to auction off one of those entities. The plan would allow "Newco" (Fertitta Gaming, Colony Capital and mortgage lenders Deutsche Bank and JP Morgan) to purchase (at the auction) Santa Fe Station, Texas Station, Fiesta Henderson, Fiesta Rancho and Native American gaming projects for $772 million, unless another party outbids this amount by at least $17.5 million. Under the restructuring of "Propco", Newco would also acquire the Propco properties, including Red Rock Casino Resort Spa, Palace Station, Boulder Station and Sunset Station; Fertitta Gaming would manage these properties under a long-term management agreement, if approved.

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