GATEWAY CASINOS INCOME FUND MANAGEMENT’S DISCUSSION & ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2007
Vernon Casino
The Vernon Casino is currently located in 12,000 square feet at the Village Green Hotel. It was opened in 1998 and no longer reflects the populations’ expectations for casinos. The Fund’s plans envision relocating the facility to a newly developed 300,000 square foot neighborhood shopping center located on Highway 97 in the north end of Vernon. This is a high traffic location in the middle of a new large-scale retail and business park development, convenient to the city population and the North Okanagan trading areas. In the third quarter of 2006, the Fund finalized negotiations and entered into a long-term lease for the property. This development was purchased by a new developer in late 2006 and the lease was negotiated to the Fund’s benefit. .
During the first quarter of 2007 Lake City Casinos entered into an offer to lease a 30,000 sq. ft. single purpose building to be constructed at the Silverstar Shopping Center located at 100-400 Anderson Way in Vernon. The lease term will be 10 yrs. with 2 renewal terms of 10 yrs, beginning when Lake City takes possession of the property. The landlord shall provide 265 parking stalls on the property for our exclusive use plus an additional 35 non-dedicated parking stalls on the adjacent lot. The offer has an option to purchase and is subject to the landlord obtaining appropriate rezoning no later than September 30, 2007. Following subject removal the new building is expected to be completed in the summer of 2008. The new casino is anticipated to contain up to 400 slot machines, 6 live tables, 2 electronic tables and a small poker room with 2 poker tables.
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