Stephen Cootey; Chief Financial Officer, Executive Vice President, Treasurer; Red Rock Resorts Inc
Frank Fertitta; Chairman of the Board, Chief Executive Officer; Red Rock Resorts Inc
Good afternoon, and welcome to the Red Rock Resorts' fourth-quarter and full-year 2024 conference call. (Operator Instructions)
Please note, this conference is being recorded.
I would now like to turn the conference over to Stephen Cootey, Executive Vice President, Chief Financial Officer and Treasurer of Red Rock Resorts. Please go ahead.
Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts' fourth-quarter and full-year 2024 earnings conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreeger, and our executive management team.
I'd like to remind everyone that our call today will include forward-looking statements under the safe harbor provisions of the United States federal securities laws. Developments and results may differ from those projected.
During this call, we will also discuss non-GAAP financial measures. Definitions and complete reconciliation of these figures to GAAP, please refer to the financial tables in our earnings press release, Form 8-K, and investor deck, which were filed this afternoon prior to the call. Also, please note that this call is being recorded.
Let's start off by stating that the fourth quarter was another very strong one for the company by all measures. Our Las Vegas operations achieved its highest fourth-quarter net revenue and adjusted EBITDA in our history while maintaining near record adjusted EBITDA margin.
For the year, our Las Vegas operations delivered their best performance ever in terms of net revenue and adjusted EBITDA while achieving near record adjusted EBITDA margin for the year. In addition to showing strong financial results, we continue to be pleased with the financial performance of our Durango Casino Resort. Durango continues to grow the Las Vegas Locals market as the team continues to execute and improve the property's operational performance, while at the same time driving incremental play from our existing customers and attracting new customers to our brand.
For the full year under our belt, the property continues to increase visitation in that theoretical win from our carded customers in the surrounded area while signing up over 85,000 new customers to our database. The property continues to ramp up and remains on track to become one of our highest margin properties, as well as generate a return of almost 16% net of cannibalization in 2024.
Cannibalization is tracking as expected, mainly affecting our Red Rock property. Like we've seen in the past, we expect to backfill this revenue over the next few years given the strong long-term growth in the Las Vegas Valley, especially in Summerlin, where Downtown Summerlin and Summerlin West are set to bring in around 34,000 new households.
As stated on our last earnings call, we began construction last month on the next phase of our Durango master plan. This expansion will add over 25,000 square feet of casino space, including a new high-limit slot area and bar. In total, 230 new slot machines will be added with 120 dedicated to the high-limit room.
Additionally, we'll be constructing a covered parking garage with nearly 2,000 spaces, improving customer access and providing flexibility for future expansions. The project, with a budget of approximately $120 million, is expected to be completed in January of 2026. Some disruption on the south side of the property is anticipated during construction.
Across our portfolio, we remain operationally disciplined, executing on our core strategy of reinvesting in existing properties to enhance amenities while maintaining a focus on best-in-class customer service. Despite the return to more typical seasonal patterns, we effectively manage expenses, delivered record financial performance with near-record margins, reinvested in our properties, and returned capital to our shareholders.
Now, let's take a look at our fourth-quarter and full-year results. With respect to our Las Vegas operations, our fourth-quarter net revenue was $492.6 million, up 7.2% from the prior year's fourth quarter. Our adjusted EBITDA was $223.9 million, up 1.6% from the prior year's fourth quarter.
Our adjusted EBITDA margin was 45.4%, a decrease of 250 basis points in the prior year's fourth quarter. On a consolidated basis, our fourth-quarter net revenue was $495.7 million, up 7.1% from the prior year's fourth quarter.
Our adjusted EBITDA was $202.4 million, up 0.5% from the prior year's fourth quarter. Our adjusted EBITDA margin was 40.8% for the quarter, a decrease of 267 basis points in the prior year's fourth quarter.
Let's turn to our full-year performance. With respect to our Las Vegas operations, our full-year net revenue was $1.9 billion, up 12.6% from the prior year. Our full-year adjusted EBITDA was $879.4 million, up 7.4% from the prior year.
Our adjusted EBITDA margin was 45.7%, a decrease of 222 basis points from the prior year. On a consolidated basis, our full-year net revenue was $1.9 billion, up 12.5% from the prior year.
Our full-year adjusted EBITDA was $795.9 million, up 6.7% from the prior year. On a full year, adjusted EBITDA margin was 41%, a decrease of 222 basis points in the prior year.
In the quarter, we converted 78% of our adjusted EBITDA to operating free cash flow, generating $158.6 million, or $1.50 per share.
When looking at our 2024 cumulative free cash flow, we converted 57% of our adjusted EBITDA to operating cash flow, generating $451 million, or $4.27 per share. This significant level of free cash flow was either reinvested in our long-term growth strategy, reinvested into our existing properties, or return to our stakeholders via debt paydown, share repurchases, and dividends.
As we finish 2024, we remain focused on our core local guests as we continue to grow our regional/national segments across our portfolio.
When comparing our results to last year's fourth quarter, we continue to see strong [card slot] play across the database, including our regional/national segments. Driven by strong customer engagement and robust spend per visit across our database, we achieved record revenue and profitability in our Gaming segment this quarter.
This was accomplished despite the broader market experiencing unfavorable hold in sports betting during the quarter.
Turning to the Non-Gaming segments, both Hotel and Food and Beverage continue to grow year over year and deliver record revenue and near-record profitability in the fourth quarter.
Our Hotel division experienced its highest fourth-quarter revenue and near-record profit, driven by our team's success and continue to drive occupancy across our hotel portfolio.
Not to be outdone, our Food and Beverage division also experienced its highest ever fourth-quarter revenue and near-record profit, driven by higher average check and cover counts across our food and beverage outlets.
With regard to our Group Sales and Catering businesses, as mentioned on our last earnings call, we faced a tough fourth-quarter comparable. That said, we are seeing positive momentum in both of these business lines, as we continue to build our pipeline into 2025.
As we look ahead to the first quarter, we are seeing stability in our core Slot and Tables business in the locals market and across our (inaudible) database. We remain confident in our business prospects moving forward.
Now, let's cover a few balance sheet and capital items.
The company's cash and cash equivalents, at the end of the fourth quarter, was $164.4 million. And the total principal amount of debt outstanding was $3.4 billion, resulting in net debt of $3.3 billion. At the end of the fourth quarter, the company's net debt-to-EBITDA ratio was 4.1x times.
Also, during the fourth quarter, we made distributions of approximately $39 million to the LLC unit holders of Station Holdco, which included a distribution of approximately $22.7 million to Red Rock Resorts. The company used the distribution to make its required tax payment and pay its previously declared dividend of $0.25 per Class A common share.
During the quarter, the company repriced its Term Loan B credit facility, which now bears interest at 2% over SOFR. [This] pricing further strengthens our balance sheet and reduces our interest expense by approximately $4 million per year.
Capital spend in the fourth quarter was $26 million, which included approximately $16.8 million in investment capital, inclusive of Durango project retainage, as well as $9.2 million in maintenance capital. For the full-year 2024, capital spend was $283.9 million, which includes approximately $172.3 million in investment capital, inclusive of the Durango project retainage, as well as $111.6 million in maintenance capital.
As we look into our capital spend for 2025, we expect to spend between $375 million to $425 million, which includes $285 million to $325 million in investment capital, as well as $90 million to $100 million in maintenance capital.
We also remain committed to strategically investing and offering new amenities to our guests in order to drive incremental visitation and spend to our properties.
In the fourth quarter, we successfully opened a Yard House restaurant at our Sunset Station and added local favorite China Mama at our Palace Station property. We are pleased with the results and guest response and early results on these new amenities.
In addition to these amenities and as discussed in our last earnings call, we've been making investments into both our Sunset Station and Green Valley Ranch properties into 2025.
At our Sunset Station property, we'll be building off success we are seeing with our recently renovated racing sportsbook and partial casino remodel by continuing [true fresh] podium, in order to better position the property to capture the continued growth in Henderson, including the master planned communities of [The Sky and then, Cadence], which are both expected to add over 12,500 new households upon final completion of both communities.
As part of the project, we'll be adding in an all-new country-western bar and night club, a new Mexican restaurant, an all-new center bar, along with a completely renovated casino space. Work has already commenced on this project. And the total cost of the renovation is expected to be approximately $53 million.
At our Green Valley Ranch property, we are expecting to start a complete refresh of our room and suite product, as well as our convention space, aligned the hotel with our most recent innovations made to our well-received high-limit table and slot rooms at the property. Work is expected to start in June of 2025, with the majority of our rooms being back in service by year end. The cost of the room and convention renovation is expected to be approximately $180 million.
Like our other recently introduced amenities, we expect these to be solid investments. However, we do expect some disruption challenges at these properties, as we introduce these new amenities to our customers next year.
Turning, now, to North Fork.
We are extremely excited about this project, which is situated on a 305-acre site located north of Fresno, California, with great [ingress and egress] of the heavily-traveled Highway 99. The project is one of the most convenient and accessible locations in Central California, with over 4.2 million people located within two hours of the development side.
When complete, this best-in-class resort will include approximately 100,000 square feet of casino space, with over 2,400 slot machines, including 2,000 [Class III] games, 42 table games, and 2 food and beverage outlets and a (inaudible) of many exciting options.
Construction is progressing well and we anticipate topping off the facility later this month, keeping us on schedule for a mid-2026 resort opening. The total project cost is expected to be approximately $750 million, which includes all design costs, construction hard/soft costs, preopening expenses, and any financing and development fee costs associated with the project.
We are also making steady progress on project financing, anticipate closing on the facility later this quarter. We're excited about these developments. And we will continue to provide these updates during our quarterly earnings call.
Lastly, the company's Board of Directors has declared a cash dividend of $0.25 per Class A common share, payable on March 31 to Class A shareholders of record, as of March -- the record of March 17. When we combine our share repurchases with our special and regularly declared dividends, we returned approximately $224 million to our shareholders in 2024.
The company had a strong year. And we remain confident in our business model, as we head into 2025. We will continue to validate our long-term growth strategy and demonstrate the power of our own development pipeline and real estate [bag], which consists of over 450 acres of developable land, positioned in highly-favorable areas across the Las Vegas Valley.
This pipeline, coupled with our best-in-class assets and locations, gives us an unparalleled growth story that will allow us to double the size of our portfolio and capitalize on a very favorable long-term demographic trends and high barriers to entry that characterize the Las Vegas locals market.
We would like to recognize and extend our thanks to our team members for their hard work. Our success starts with them. And they continue to be the primary reason why our guests keep coming back. We thank them, again, for voting as top casino employer in the Las Vegas Valley for the fourth consecutive year, being certified by Great Place To Work for a third year in a row, as well as being recognized by Forbes as one of America's best in-state employers.
Finally, we thank our guests for their loyal support in each of the last six decades.
Operator, this concludes our prepared remarks for today. And we are now ready to take questions.
Operator
(Operator Instructions)
Carlo Santarelli, Deutsche Bank.
Carlo Santarelli
Steve, you alluded to it a little bit but didn't quantify, and I know, back in November, coming off of a tough October on the sports side, I think you called out $6 million or $7 million from a hold impact there. Incrementally, December was a struggle, I think, for the books in town.
Anything you can quantify in terms of, maybe, the total sports betting hold impact, whether it's year over year or relative to normal in the fourth quarter?
Stephen Cootey
Yeah. No problem, Carlo.
And one thing to mention, the Sports business, overall, was healthy, with (inaudible) being up almost 10%. But, as I mentioned on previously disclosed earnings, we closed with $8 million in October. And then, an additional $6 million in December year over year.
Carlo Santarelli
Okay. Great.
And then if I could, just a follow-up. Obviously, a lot of moving parts with the 4Q, just in terms of Durango being in for a stub period this year.
As we move into the first quarter, and you talked a lot, last call, about some of the seasonality that you anticipated in the 4Q.
Would you be able to do something similar as it pertains to the 1Q, acknowledging low sports hold, the disjointed year-over-year comparison that we obviously saw with Durango, and how you see seasonality playing out quarter to quarter?
Stephen Cootey
Yes. I think seasonality, it just look backs to history, right?
Generally, Q4 to Q1, from an EBITDA perspective, is usually about -- up about 6.6%, somewhere in that range.
Operator
Shaun Kelley, Bank of America.
Shaun Kelley
Steve, wondering if we could get a little bit more color just on state of the consumer. I think most of us that stare at regional gaming data noticed a bit of an acceleration post election.
The locals is a little harder to glean, just traffic trends from -- given the macro nature, if we don't get property-specific details.
So what did you see? Did you guys see something similar in terms of, maybe, a pickup there in some of your core-rated play after the election? And just how has the mood fell, maybe, subsequent to that, so far, in Q1?
Scott Kreeger
Yes. This is Scott. I'll take that one.
From a database perspective, we're seeing consistent positive trends across the database. And we've seen that in the past quarters. And continuing to look into the beginning of the first quarter, we see consistency there.
Predominantly, led by our high-end network customer segments -- our regional and national. So across the database, we see stability.
As it relates to Durango, we continue to grow our new-to-brand customers. We're up to about 85,000 new sign-ups at the Durango zone. And, at the same time, we've seen really strong increases in new member sign-ups across the core properties (inaudible).
Lorenzo Fertitta
This is Lorenzo.
Relative to the election, we did see an acceleration, which is typical -- we expected that. Typically, we get a lull leading up to presidential election. People are not focused.
But after the election, we definitely saw some acceleration.
Operator
Jordan Bender, Citizens JMP.
Jordan Bender
On the backfill comments, you, guys, have previously said that that could take about two to three years to backfill Red Rock. Steve, in the prepared remarks, you said that you could be a couple of years away from fully backfilling that.
I might be splitting hairs with this question. But is that taking, maybe, a little bit more time than anticipated to get back to pre-Durango levels?
Stephen Cootey
My apologies if it was confusing.
I think, with the statement of being on track, we generally have seen, historically, this takes back so it takes about two to three years. And that was our experience in our past openings. And we are on pace to hit those targets.
Jordan Bender
Understood.
And then, just the commentary around the quarter over quarter into 1Q with seasonality? Just keeping in mind that we did have Super Bowl in the prior year, is there any way to quantify what positive impact that did have in the prior year, as we think about modeling?
Stephen Cootey
The Super Bowl, I think, from a hold perspective, (inaudible) across the street, it wasn't very good. It wasn't a very good --
Lorenzo Fertitta
Last year was not a good outcome. This year was a better outcome.
Stephen Cootey
Yes, this year is a better outcome. We needed a 49ers win last year.
But from a hotel perspective, probably cost us about $1 million, across the board.
Operator
Steve Wieczynski, Stifel.
Steven Wieczynski
So Steve or Scott, whoever wants to take this.
Maybe, from a high-level perspective, just wondering if you can give us some color on how you're thinking about your customer base for this year?
It sounds like, per Scott's commentary, stable seems to be the word, I guess, you guys would describe. But just trying to gauge how you, guys, are thinking about that spend level across, maybe, rated play versus non-rated play?
And then, maybe how you're thinking about the group business for 2025 as well?
Scott Kreeger
Yes. This is Scott. I'll take it.
We'll start out with just the core customer. As I said, we've seen stability. We continue to anticipate the market to be stable with some green shoots. We're looking forward to the year.
Like Lorenzo said, coming out of the election, it seemed like we picked up some steam. And so if you look at all of our customer and consumer metrics, they're all positive, going forward. \
As you look at group, I think you mentioned, I think we had mentioned on previous calls that the fourth quarter was going to be a little tough for us, from a group perspective. And that will fade into the first quarter as well. And then, for the remaining three quarters of '25 and into '26, we see strong pickup in the group segments.
The good note about the fourth quarter was we still had a record hotel revenue in the fourth quarter because we were able to make up the gap and grew higher OTA mix and other strategies. So we like where that's headed.
There's a direct correlation between hotel and catering. The fourth quarter, we're a little light on catering. But, actually, in the first quarter, we made it up and we're seeing positive year-over-year increases in catering, going forward.
So we like the (inaudible) market group business. We like the regional and national business, right now. So we're optimistic.
Steven Wieczynski
Okay. Great.
And then, second question, Steve, just in terms of -- there always seems to be rumors out there around the M&A -- potential M&A across the gaming space. And just, maybe, wondering if you could give us your updated thoughts around current appetite for M&A?
And I'm guessing you, guys, probably still don't have much of an appetite for buying versus building, given your large land [bank] but just wondering if -- wanted to hear if there -- if anything has changed on that front?
Stephen Cootey
Overall, we look at everything. But I think you hit the nail on the head. We are sitting in probably the best regional gaming market in the United States, with 6 [parts] of the land ready -- primed and ready for development.
Operator
Stephen Grambling, Morgan Stanley.
Stephen Grambling
I know you don't really provide explicit guidance but just wondering if you could provide additional color on the puts-and-takes impacting EBITDA in 2025 versus 2024, as we think through all the different renovations that you've got going on, underlying growth in Durango ramping?
Scott Kreeger
Yes. Let me take some of it and then, Steve might able to add some color. I'll take the disruption piece.
I think we mentioned in the last call that we may see as much as $25 million of disruption in the year, as we continue to add new amenities, enhancements to the property. The flip side of that is that we are very encouraged by the capital investments that we've made thus far, namely our high-limit rooms and some of the new restaurant amenities that we've put forth.
So we anticipate that, as these new capital investments come online, we're going to see incremental growth. So Steve, maybe you can add some color?
Stephen Cootey
Absolutely. I mean the biggest put-and-take is right -- we are lapping Durango. And so we were very happy that the team achieved 16% cash-on-cash return in year 1.
We are pushing to that 20% return over the three years, in order to hit our targets. So there's still room to grow on the Durango front. And then, we're obviously very heavily focused on the backfill of Red Rock.
I think, from an expense standpoint, one of the things we were lapping is that in order to be competitive, we proactively raise salaries. And salaries were up on a same-store sales basis, up 3.1%.
We feel that the labor market is moderating some. So we're not only going to lap the salary increases but, also, that we have to deal with the minimum wage increases in July. So there's a put and a take.
Steven Wieczynski
Helpful.
And one quick follow-up. Just that $25 million, that's incremental to any of the impact that you've seen this year? Is that right?
Stephen Cootey
Yes. So far, we've seen very little impact. So the disruption is expected to be spread throughout the year. With Green Valley, obviously, not really hitting until June.
Operator
Barry Jonas, Truist Securities.
Barry Jonas
The deck mentions 8 acres in Reno that are ready for development. I don't believe that was in last quarter's deck.
Can you, maybe, talk about your current thoughts on developing that market overall? And where it sits, priority-wise?
Scott Kreeger
This is Scott.
You're correct. I do think it's always been in our deck, as an available site of land. It may be on the actively-marketed side.
So we've gone back and forth. We've looked at developing that project. It is gaming-entitled.
It is a great location in Reno. And it does, as I said, have the entitlement.
From a priority perspective, we like the development opportunities we have in Las Vegas. But we're always open to developing that at the right time in the right place, given the priorities. Or if we get an attractive offer for it, that we would divest and sell.
Barry Jonas
Great.
And then, just a question on North Fork. Can you talk about where the tribe is at, with compact discussions? And to what extent does that influence the timing or gaming composition when the casino opens?
Stephen Cootey
Yes. We went through secretary procedures, so there's no compact. And ultimately, well, it took us a little bit longer to get to this place.
Ultimately, that leads to a bit higher margins, when we start operating.
Barry Jonas
So you'll be able to have Class III games with no limitations, just to be clear?
Stephen Cootey
2,000 Class IIIs. And that's for two years. (inaudible) and then we -- there's no limit.
Operator
Dan Politzer, Wells Fargo.
Daniel Politzer
First, in terms of the cadence for next year, is it fair to say that the peak disruption periods from Green Valley Ranch and Sunset construction will take place in the third and fourth quarter?
Scott Kreeger
Yes.
Daniel Politzer
Okay.
And then, we're coming off the Super Bowl -- obviously, we had F1 in Vegas, again, in the fourth quarter. Can you, maybe, talk about what you observed, over the valley, for these two big events?
Obviously, Super Bowl, it's typically a big event. Vegas, didn't take place there this year. But if you can just, maybe, opine on the demand levels that you've seen across your properties in the last few months for these peak events?
Stephen Cootey
I think, for F1, we're going to continue with the same answer. Well, we think it's a wonderful event for Vegas. And we're proud that the city host the event. It really is a [non-event] for Red Rock Resorts. So I don't think we see any real impact or noticeable impact.
Super Bowl is a different story. We did need the 49ers to win. But, this year, I think we performed a little bit better, from a gaming perspective.
And then from a hotel perspective, earlier, I quantified that the loss -- we got to make up about $1 million with hotel business, with us hosting the Super Bowl of Las Vegas last year.
Lorenzo Fertitta
Yes. This is Lorenzo.
The Super Bowl was a significant impact for our business, [both] gaming and non-gaming, regardless of how the game turns out or whether we hold on -- whatever happens.
But it was a significant positive impact.
And as Steve said, F1, while it's amazing and great for the city, just is an absolutely zero impact on our business. Either way, whether it's strong or not strong.
Daniel Politzer
Got it.
And just one last quick housekeeping. Any pointers on how to think about corporate expense growth for '25?
Stephen Cootey
Yes. I think, right now, it's about $21 million. We continue to expect to be at that level.
Operator
Chad Beynon, Macquarie.
Chad Beynon
I wanted to ask on margins for '25. Steve, you mentioned that labor is up, a little over 3%. As we think about some of the other components, whether it's utilities, insurance, marketing, et cetera, should we expect any major inflationary growth in '25? Or have those settled down pretty significantly? And if we see revenue growth in '25, we could actually hold margins, all else, equal?
Stephen Cootey
Yes. I think what you're seeing is, from a marketing perspective, the market continues to be rational. I think from a labor perspective, we are overlapping not only the minimum wage but a proactive, large increase to make sure that we're competitive in the market. So we hope that that goes away.
Obviously, sports was about 150 basis points of margin degradation, just this quarter. So we are hoping for not only the better Super Bowl, which I think we got, we're hoping for better March Madness as well.
And the thing that I think that we are nervous about is [COGs]. And food cost continues to be elevated -- eggs, proteins, et cetera, continue to be elevated. So that's something we're on the look out for.
Scott Kreeger
And we do have one outlier, the [GAN] sports wagering system. Once we get that out in Nevada Gaming Control Board Audit, there'll be a good chunk of duplicate expenses that we're incurring, right now, that will go away and which will help margins.
Stephen Cootey
But, overall, if you like where our margin profile is (inaudible), sometimes it always helps to look back.
When you look back at our fourth quarter, pre-COVID, our margins were (multiple speakers) 36%. And so sitting here, today, (inaudible) continually asked about the sustainability of the margins and being north of 45%.
We like the structural changes that this team put in place during the COVID period and continue to execute on it.
Chad Beynon
Great.
And then, given the projects that you have, right now, do you have any updated views on the plans to grow the tavern business bigger? Or is the focus on the internal projects and Durango 2.0? And then, activating the land back?
Scott Kreeger
This is Scott.
We're excited to say we are bringing, online, two more tavern -- or we brought, online, two taverns. We're bringing, online, six more taverns within the year. So that's a pretty full play for us.
The first two taverns have been very pleasingly above our expectation and performance. So we think we're on to something there. And we're working hard to make sure that we open the six additional taverns in the right manner.
Look, opportunistically, these things come up, and we look at these opportunities if they fit our investment profile on the tavern. Then, we may acquire more or build more.
Operator
Joe Stauff, Susquehanna.
Joseph Stauff
Okay. I wanted to ask about, just, visitation levels, in general -- you're lapping Durango. Is it fair to say that, say, the overall level of visitation, given the different regions of the locals market, have they stabilized in terms of Durango, now, a year later?
And then, how do you drive additional growth in your database, from here? Is it more about just pushing people up at different levels? O do you feel so there's more organic growth to realize?
Scott Kreeger
This is Scott. Let's take visitation just in its raw data.
Visitation is generally flat within the database. But we are --
Frank Fertitta
With that being said though, Scott, that's against, like, the grand opening up Durango. So that's good news to be comping against that.
Scott Kreeger
We do see consolidation of visits. But we do see it to the upside of spend per visit. So in totality, we see upside.
And, to Frank's point, we are seeing, one, our uncarded customers settle back into what might be their home property, as they went and gave Durango a trial. And then, as Frank mentioned as well, you are looking at that year-over-year comp to Durango.
Joseph Stauff
Got you. And going -- I'm sorry, Scott.
Scott Kreeger
As far as growth, we continue to lean into regional/national. That's an area of upside for us, especially through our hotel product.
And we mentioned that after the first quarter, we're going to see really strong increases in group sales and strong increases in hotel visitation, in general.
As it relates to our core and VIP customers, products like the high-limit rooms continue to grow incremental revenue. The new amenities that we're bringing online, as well as refreshing our products at GVR and Sunset, will bring incremental visitation and growth as well.
Lorenzo Fertitta
It's Lorenzo.
The market continues to be dynamic. There continues to be population growth (multiple speakers). And as we've talked about before, the interesting thing is that we're seeing it in our high-limit rooms, in some of our offerings -- higher-income person moving and relocating into Las Vegas.
And we're continuing to see that. Obviously, we keep our eye on home prices. There is a little bit of a supply-demand issue, right now. We're just hoping that the [BLM] releases more land so that more housing can be developed.
And that's my understanding of what the governor is working on, right now. And we think that gets done. But there's certainly no lack of demand, as far as people willing to relocate here.
So the market is dynamic. And we think it's going to continue to grow as it has over the last 20 (multiple speakers) --
Frank Fertitta
And the good news is the majority of the growth that's taking place is in the suburbs, where our properties are located off of the [beltways] and major infrastructure.
Joseph Stauff
Got you.
And if I could squeeze an additional one. You've got [350] of project capital between the three: Durango Phase II, GVR, and Sunset. Some of that spend, based on your guidance, Scott, goes into the first quarter of next year.
Any preview of how you're thinking about additional projects, at this point?
Frank Fertitta
No. I think we'll be in a position, probably, by this time next year to give guidance on what the next project is going to be.
We're working very hard, right now. But we're not in a position to disclose it, right now.
Operator
Brandt Montour, Barclays.
Brandt Montour
So this isn't a -- it's like splitting hairs but it looks like the CapEx expectation for GVR went up just a slight amount.
I'm just curious if there's been any change in scope to the project or maybe add-ons? Or that's just normal-way inflation or what that is?
Stephen Cootey
I think, Brandt, when we were taking a look at the hotels and the timing of the hotel construction, I think the team thought at adding in and refreshing the meeting space was very important. As these hotel and the meeting space really work together. So that was added to the project, since the last earnings call.
Brandt Montour
That's perfect.
And then, just a follow-up on the post-election commentary. You did give some color on the broad stability of the market but the pre-election lull was well documented.
The post-election behavior, can you, maybe, talk rated versus unrated behavior? And what, specifically, you saw accelerate, visits or spend per visit?
And then, if it's sustained into January, what parts of that equation sustained? And which parts may have fallen back off?
Scott Kreeger
Our percentage of carded and uncarded remains consistent. We're about 26.5% uncarded in the database.
And, as it relates to post-election, we continue to see strength in, like I said, the VIP, which is our highest-end segment, our core segment, and regional and national. We expect to see that continue in the rest of '25.
Operator
John DeCree, CBRE.
John DeCree
Maybe one more for you on the Group Sales business. You talked, quite a bit, about that today and the momentum you're seeing in the back half.
Curious if you could speak to the capacity you have to grow that. Do you have a group room night target? Or how do you think about balancing that, with keeping rooms for your casino customer?
And just trying to get a sense of have many more group sales you could do; how much headway you have? Or if it's more on pricing that you're getting on rooms and Catering business that's driving that momentum? Or just more groups that you're going out getting?
Scott Kreeger
Well, I think it's both. One, we have capacity still to go. So we're probably 60%, 70% of the rate, there, in the year, for the year on occupancy of the meeting space.
The other thing is is because we have a premium product that we would put up against anybody in the market, we compete on price. And so there's an opportunity to continue to grow price.
There was a little bit of a lull in the back half of '24, where people were spending right to their minimums and they weren't going over their minimums. So I think there's an opportunity to get incremental [in-trip] revenue out of these customers, as we go forward.
So I think there is upside there.
John DeCree
Got it. Scott.
Maybe one quick follow-up on the same topic. What are you, guys, seeing from those group customers that come in and what they do on the gaming floor? Are they gaming more? Are they turning into gaming customers like repeat groups? And are you getting new gaming customers? Are those periods of time, good sign-ups for you, for gaming customers?
Curious how you're of cross-selling from the group sales to gaming?
Scott Kreeger
A couple of things. One, we have the benefit of being predominantly corporate in our group mix, which comes with expense accounts and a customer that's more willing to gamble and eat in the restaurant. So it's a better-quality customer than, say, an association customer.
So we lean into that and we capture them through all the great new restaurants that we have. Specifically, at Durango and at Red Rock, and, now, Green Valley Ranch, or [Tikka] Mediterranean restaurant and Blue Ribbon Sushi. So we have amenities to continue to grow that.
You had asked about yielding rooms. It's our philosophy that putting the most profitable customer in the room is the goal. And that sounds a little obvious. But it's a nuance and an art, right?
So we're constantly looking at the overall work of a gaming customer compared to a conventioneer or a group customer. We're probably a little bit more favoritism to the gaming customer because we have an opportunity to repeat visitation.
Operator
Ben Chaiken, Mizuho.
Benjamin Chaiken
Nice quarter.
Just one quick one for me. I believe you have a development note associated with the North Fork development. Can you remind us the value of that? And then, is that still a '28 event ballpark, to get that back?
Stephen Cootey
The note is about $156 million as of December 31. As I mentioned in the remarks, we're looking to complete our financing for the project, later this quarter.
So pending the results of that, we may be able to get some of that note back earlier than 2028 and, potentially, this year.
Operator
David Katz, Jefferies.
David Katz
I wanted to go back to one, a bit earlier, regarding what happens beyond the current projects that you have on the board. And it's not about asking what the project would be in 2026 or any details about them. But really more how you're thinking about leverage and harvest mode versus investment mode and balancing those in 2026.
More of a general strategic question -- what should we expect in that out-year beyond this year?
Stephen Cootey
No problem. As I mentioned, some of the CapEx in 2025 would continue to bleed into 2026.
And Frank mentioned that we could possibly be in a position to announce our next project next year, this time next year.
Right now, leverage is continuing to go down as we ramp up Durango in the backfill of Red Rock. When it comes to fruition, we're sitting at 4.1 times. Very comfortable at 4.1 times.
Interest expense is coming down. (inaudible) interest rates coming down but also due to the refinancing. We like to see leverage consistent, at this point. But if there's an opportunity that came up, we feel okay floating leverage a little bit higher.
Operator
This concludes our question-and-answer session.
I would like to turn the conference back over to Stephen Cootey for any closing remarks.
Stephen Cootey
Thank you, everyone, for joining the call and look forward to talking again in 90 days.
Take care.
Operator
The conference has now concluded.
Thank you for attending today's presentation.
You may now disconnect.
