Gateway Casinos Income Fund has announced a $23.5-million purchase of the Radisson Hotel Burnaby and has big plans to expand it as part of a major gambling and accommodation complex.
The Gateway Casinos Limited Partnership, the fund’s operating enterprise, is purchasing Villa Hotels, the landlord of the partnership’s Burnaby Casino and owner-operator of the Radisson Burnaby, which is across the street from the casino.
The purchased assets include the casino. The $23.5-million price will be paid in borrowed cash, less assumed mortgages of $7.9 million.
“This acquisition provides the fund with the opportunity to redevelop the Burnaby Casino into a best-of-class facility,” Gateway said in announcing the deal.
It intends to redevelop the casino and the Radisson Burnaby, a 275-room hotel, conference centre, restaurant and sports bar dating to the mid-1970s along the Trans-Canada Highway, as the British Columbia Lottery Corp. encourages Vancouver-area casino operators to expand and add entertainment venues and amenities such as show lounges, restaurants and bars.
Gateway said it initially plans a $4-million, 13,000-sq.-ft. expansion of the existing casino, making room for 400 additional slot machines and seven new gaming tables as well as the introduction of craps. The casino will continue operating during construction, which is expected to take four months after rezoning is approved.
In the second phase, budgeted at $60 million, the hotel’s 200-room, 23-storey tower will be retained while its elderly low-rise building containing 75 rooms will be demolished to make way for a 100,000-sq.-ft. casino with 1,000 slot machines, 50 table games, a 15-table poker room, a high-limit gambling area and an entertainment lounge. This development will also include a new hotel lobby, ballroom, meeting space and restaurant.
Subject to necessary approvals, this facility would open in the spring of 2006.
“The Burnaby Casino has been the No. 1 casino in the province since it opened in 1999, and this project will allow us to maintain that position in the long term,” said Dave Gadhia, president of Gateway Casinos.
“We looked at a variety of alternative sites, but the Villa Hotel is by far the best option.”
Gateway (GCI-TSX) – which in addition to the Burnaby Casino operates the Palace Casino in Edmonton and the Lake City Casinos in Kamloops, Kelowna, Penticton and Vernon – intends to finance the whole $85-million project with debt “to take advantage of the fund’s current low leverage ratio.”
