Red Rock Details $120M Durango Expansion, Unveils Special Dividend

Posted on: May 2, 2025, 01:52h. 

Last updated on: May 2, 2025, 01:53h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

• Says Durango on pace to be one of its “highest-margin properties”
• Expansion includes 25,000 square feet of new casino space
• Operator declared special dividend of $1 per share

Shares of Red Rock Resorts (NASDAQ: RRR) gained Friday after the operator outlined plans for its $120 million expansion of the Durango Casino & Resort in Southwest Las Vegas while telling investors it will deliver a special dividend.

The operator of Las Vegas locals casinos has previously discussed the Durango expansion effort, which was announced last year, and provided more details on its first-quarter earnings conference with analysts. CFO Stephen Cootey noted on the call the project is already underway and is on pace to be wrapped by December, slightly ahead of prior expectations.

This expansion will add over 25,000 square feet of additional casino space, including a new high limit slot area and bar. In total, the project will introduce 230 new slot machines with 120 allocated to the high limit room,” Cootey told analysts.

A new parking garage with nearly 2,000 space is also on the docket. Cootey said there has been some disruption on the south side of the property, but added the operator is taking “proactive steps to minimize guest impact.”

Durango Already a Jewel in Red Rock Portfolio

The $750 million Durango opened in December 2023, making it the newest casino hotel in Red Rock’s Las Vegas-only portfolio and the venue is already proving to be a winning bet for the operator.

“Durango has continues to grow the Locals market and drive incremental play from the RRR customer base,” observes Truist Securities analyst Barry Jonas. “The property continues on a strong pace and will become one of RRR’s highest margin properties, generating 16% returns (net of Red Rock cannibalization, around 10% to the property). That said, RRR’s planned revenue backfill is ~six months ahead of pace with the worst of the impact behind the company.”

Elsewhere in the Las Vegas Valley, Red Rock is expected to commence a previously announced $200 million enhancement of its Green Valley Ranch Resort Spa & Casino in Henderson next month. That will improve convention space and guestrooms and the operator is targeting all rooms being available by the end of this year. Renovations are also underway at Sunset Station in Henderson.

“At our Sunset Station property, we are building up the success we are seeing with our recently renovated race and sportsbook and partial casino remodel by continuing to refresh the podium in order to better position the property to capture the continued growth in Henderson, including the master planned communities of Skye and Cadence, which are expected to total over 12,500 households upon final completion of both communities,” added Cootey.

Red Rock Delivers Another Special Dividend

In addition to its regular quarterly payout of 25 cents a share, Red Rock announced a special dividend of $1 per share. That will be distributable on May 21 to shareholders of record on May 14 and marks the fourth time in the past five years the gaming company has paid a special dividend.

The special payout was funded in part by a $110 million influx of capital from Red Rock’s management of the North Fork Mono Casino & Resort in Madera, Calif., which is scheduled to open next year. There are other value propositions with Red Rock stock, including the operator’s vast real estate holdings. The operator says its property bank is worth an average of $2 million per acre

That “to us is well below what investors are currently embedding in the current share price. We aren’t saying all their ~450 acres would get sold for that amount per acre but there are clearly parcels of land out in their portfolio which aren’t getting full recognition from investors they probably should be,” notes Stifel analyst Steven Wieczynski.