TrizecHahn Corp. announced it will take a $285 million write-down against high-profile assets such as Desert Passage in Las Vegas and Hollywood & Highland in Los Angeles.
The Toronto-based developer cited cost overruns and the decline in international and domestic tourism following the Sept. 11 attacks. It said the write-down, which will be reflected in the company’s year-end 2001 earnings statement, was the result of recently completed third-party appraisals.
TrizecHahn called the assets, which are up for sale, "non-core." It said the value of its Hollywood & Highland mixed-use entertainment complex dropped by $217 million. The rest of the write down, which amounts to $68 million, involves assets including Desert Passage ($18 million); retail properties in Germany, Poland and Czech Republic ($10 million); Canadian assets ($20 million); and an investment in Captivate Network Inc. ($11 million), the company said.
"The total cost for Hollywood & Highland is roughly $560 million, significantly higher than the original budget, although a portion of the additional costs do relate to project expansion," Morgan Stanley analyst Greg Whyte wrote Wednesday in a report on the write down. "Desert Passage was impacted primarily by declines in both domestic and international tourism, especially since Sept. 11, and by the bankruptcy filing of the adjacent Aladdin Hotel and Casino."
TrizecHahn is in the midst of discussions aimed at finding a new operator for the hotel and casino. But the sale of the assets will probably be delayed beyond the original target date of 2002, Whyte notes. He says the company expects to sell Hollywood & Highland in sections by the end of 2004.
-- Staff and wire reports
