Miki Naftali is chief executive officer and president of ELAD Group, which purchased the New Frontier Hotel & Casino from owner Phil Ruffin for $1.24 billion last year, and the property was imploded in November to make way for an $8 billion luxury, mixed-use project bearing The Plaza name. New York-based ELAD Group and Israel-based IDB Group are partnering on the project to be built on the 34.5-acre parcel just north of the high-end Fashion Show Mall and across from the Wynn Las Vegas and Encore properties. The Plaza will include an ultra-luxury hotel, private residences, retail outlets, a state-of-the-art casino, destination restaurants, an entertainment venue and a convention complex. Construction crews are expected to begin excavation early this summer, with completion slated for 2011. Naftali talked with IGWB Senior Editor Marian Green about ELAD’s first venture involving gaming, the Las Vegas market and future growth plans.



Why was it important for Elad to move into the Las Vegas market?

Naftali: It’s a very important part of our bigger plan to expand the Plaza brand, and we are taking those steps very carefully, because the brand is so unique that we are carefully selecting specific cities around the world. The big picture is to be in no more than 25 major cities around the world. And we think Las Vegas is obviously one of the most important cities in the U.S. and one of the most important in the world. Today, there are almost 45 million tourists here every year, and by the time we open our property, we think, based on all the statistics, there will be close to 50 million tourists. We think this is a very important market and a dreamland for developers. You can really use the best vision and create something unique, and that’s what we like to do.



How long were you looking in Las Vegas before you settled on this site?

Naftali: Probably around a year. What was very important for us, again, is that different investors or different developers have different needs. For us, location within a specific city is extremely, extremely important because the brand has to be in a very, very good location. It wasn’t easy to find the right location on the Strip. And we were very lucky, the way that we see it, to find and to be able to close this specific location because we believe this is the center of luxury on the Strip.



You paid a record price for that property, but that didn’t seem to faze you at all.

Naftali: No, not at all because, you know, a record price compared to what? Compared to the local market, but the local market is changing tremendously. If you look at the density that was built 10 or 15 years ago, compared to the density that is being built today, this is a completely different density. For example, if you look at The Mirage or Treasure Island, those are truly milestones [for] the Strip in Las Vegas, and when you compare them to what is being done today in the CityCenter, for example, it is completely different. And it makes a huge difference on the price, because in any other country or in any other major city around the world, you pay for buildable area. You don’t pay per acre. And the reason is there is one acre, where you can build only 1,000 square feet, and there is another acre that you can build 1 million square feet, so it doesn’t matter the price per acre. What really matters is how many square feet you can build and how much it costs you per square foot. Now, in some other locations on the Strip, for example, because of height restrictions, close to the airport and so forth, you cannot build the same density, so it’s really relative. Compared to other major cities around the world, this is not an expensive price.



So, how many square feet can you build there?

Naftali: Well, the total project that we are going to build in phases is going to be close to 15 million, almost 16 million, square feet.



This will be the second largest private real estate project, after CityCenter, in the world. Can you talk about what type of statement you hope to make with this project?

Naftali: We are in a unique situation because we have lot of experience in developing real estate, not necessarily in the gaming industry, but we have a lot of experience in building real estate throughout the world, very high-end real estate, and we own a very unique and powerful brand. Usually it’s either-or. You own a brand or you’re a management company, but not a developer or not a gaming company, or you’re an investor or a developer, but you need to create a brand or you need to bring a brand. We have a very unique opportunity because we have both. And it allows us to really create something unique without going through a lot of restrictions with different management companies and different branding restrictions and so on and so forth. If you take The Plaza in New York, this is such a prominent property, and it’s so unique. In any aspect you look at, the brand is so powerful. Our intention is to take this quality and this very unique ambience and to bring it to Las Vegas. We believe that we can do it. We believe there is a market for it, and we think it will be very beneficial for everyone, not only for us. It will be beneficial for the city. It will be beneficial for our neighbors because it will help to improve the market.



Can you talk a little bit about what The Plaza means as a brand?

Naftali: The Plaza as a brand means six-star quality vis-à-vis the ambience of the public spaces. This is the real stuff. This is not imitation of anything. The real materials, the real ambience. Between the spaces that we are going to recreate in Vegas — the famous Palms Court, the Oak Bar, the Oak Room – is a lot of history and character [and] very high-end service. And the way to be able to deliver good service is we are designing our property in a way that every customer will be able to get the personal touch, the personal service. It’s a big challenge to do something like that in a mega-mega resort with thousands of rooms, especially if those are in one building. If you have thousands of rooms in one building, it’s a big challenge to deliver great service.

Steve Wynn took his approach, which was by creating the tower suites at the Wynn. He did a great job, and, similar to that, what we are doing is creating separate, different buildings. Each one will be basically standalone to be able to deliver to our customers great service, which is probably missing in Las Vegas right now.



Is there anything that you learned from your experience renovating The Plaza in New York that you can use in developing this project?

Naftali: Well, I think it’s a combination between the renovation in New York and tons of other real estate developments that we are doing throughout the United States, Canada and Asia, where we are very active in Singapore and China. From all those experiences, we learned a lot. And the one thing I would say is the world is becoming one. There are so many international customers; private residences buyers now come from all over the world. And it’s not enough just to understand the local market. I think it’s extremely important to understand the national and international markets, and we learn from all those experiences — basically putting together the best plan that will appeal for the international market, the European market as well as the North American market.



This will be ELAD’s first gaming project. What sort of challenges does that present?

Naftali: First of all, this is a mega-development. The size of the development is a challenge, there’s no question about that. It involved a lot of brain power and a lot of effort to get it done the right way. Secondly, of course, gaming for us, up until a few months ago, was new. And we are very happy that we were able to put together a great team with a lot of experience so it’s not that we entered the market with an ego and said, “We know how to run a gaming property, and we don’t need anyone to tell us what to do.” We looked for the best talent in the market. So, our top gaming executive is Danny Wade, who has tons of experience and is much respected in the gaming industry, and he’s doing a fabulous job. He’s a great asset, and we are putting together a great team that will operate the property as well as the other gaming properties that hopefully we’ll do in the future.



As you know, there’s plenty of competition going up on the Strip right now, and your project will be one of the last on the scene. How is that a help or a hindrance?

Naftali: In every market in the world, we see that competition is actually good. One of the major reasons that 45 million people are coming to Vegas every year is the variety and quality of the properties and the variety of activities. It’s just amazing. Good competition forces everyone to raise the bar, to raise the standard, and I think the quality of the developments and resorts today in Vegas is completely different from the ones [bult] 10 or 15 years ago. The way that we see it, it’s only good.



Are you saying there’s more of a critical mass of higher-end properties and that helps?

Naftali: Yes, there is more and more demand for high end every year — we see it all over the world. If we think what our grandparents used to do and what we do today, the way we live our lives, most of us work more hours, we have more pressure. But we are willing to pay for service, we are willing to pay for a great meal, we are willing to pay for many things that our grandparents didn’t even think to ever do. [But] what is high end today is not necessarily the high end of tomorrow. The quality and the demand for quality are increasing all the time.



You talked about your plans to take The Plaza brand globally. Where else might you be looking?

Naftali: We are actually very active in two different markets — one is, obviously, gaming. On the gaming side, there are a couple of very specific markets that we believe can fit The Plaza brand. Las Vegas is very important for us. And we will be looking down the road to expand to one or two markets in Asia. But we are not only a gaming company. We are expanding in the hospitality market as well, and Europe, specifically London and Paris, are very important for us. We are considering Rome as well. Russia and Moscow are also important markets. In Asia, we have already secured Singapore. Tokyo is very important for us. China, either Shanghai or Beijing, are very important for us. We are working some opportunities in China. Hong Kong right now is important for us. And obviously North America, not to mention Beverly Hills, is very important for us. I think it’s quite clear that these are top cities around the world that could support a very high-end hotel and very high-end private residences.



With the development on the Strip right now, are you concerned at all about finding the right type of employee?

Naftali: We are somewhat concerned, but we think that Las Vegas is a great city to live in. If I remember correctly, there are about 5,000 new citizens every month in Las Vegas, so the city is growing, and there is good talent that is moving to Vegas. And I think there is some talent that will be looking to go into a very high-end property. We need to make sure that we have the best employees for what we’re looking to do, and we think we will be able to have the right employees.



Right now we’re in a downturn in the market. Will Las Vegas be one of those places that rebounds faster than others?

Naftali: Yes, because the gaming industry and the resorts are doing very, very well. One of the trends that I think is quite good for the major players is that smaller properties are not being built because the smaller developers do not have the funding to build those properties. So the construction costs are now starting to go back to the normal level after being completely crazy. As far as I know, we’re going to be the only major property to open in 2011, so I think that this is good timing for us.



Has the cost of the property changed?

Naftali: No, we think it’s actually working quite well for us. Overall throughout the nation, there is a slowdown in construction. Trades are not as busy as they used to be. The demand for material is not the same as it used to be in the last few years, and frankly, it’s a good opportunity and a good result for us to build a property. On a daily basis, we get vendors calling us, wanting to know when we are going out to bid to different trades, and this is a good sign.

I think that it is a healthy market.