MGM MIRAGE Provides Update on Las Vegas Development Plans : Project CityCenter will feature a 4,000-room luxury hotel and casino
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MGM MIRAGE Provides Update on Las Vegas Development Plans : Project CityCenter will feature a 4,000-room luxury hotel and casino
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Category: North America & West Indies / Carribean islands
This is a press release selected by our editorial committee and published online for free on 2006-02-14
MGM MIRAGE (NYSE: MGM) today
announced that its Board of Directors has approved the design and budget for
Project CityCenter, the Company's previously announced urban development
project at the heart of the Las Vegas Strip. Project CityCenter will feature
approximately 2.3 million square feet of residential space; a 4,000-room
luxury hotel and casino; two 400-room, non-gaming boutique hotels; and over
470,000 square feet of retail, dining and entertainment space. The approved
design will further enhance the overall significance and profitability of
Project CityCenter, which is expected to provide owners and visitors alike a
truly unique experience.
The overall cost of Project CityCenter is estimated at approximately $7
billion, excluding preopening and land costs. After estimated proceeds of
$2.5 billion from the sale of residential units, the Company believes that the
net project cost will be approximately $4.5 billion. Project CityCenter will
be located on approximately 66 acres between Bellagio and Monte Carlo on the
Las Vegas Strip, and will be connected to these resorts via a state-of-the-art
people mover system. The Company expects to break ground in mid-2006, and
estimates that Project CityCenter will open in the fourth quarter of 2009.
The detailed design phase of the project is still under way, and the budget,
scope and timing of Project CityCenter are subject to change.
"The market for casino resorts and vertical residential space in Las Vegas
is very robust," said Terry Lanni, Chairman and Chief Executive Officer of MGM
MIRAGE. "We believe the most important aspects of successful casino resorts
and residential and retail developments are embodied within Project
CityCenter: location, brand and amenities. Our Board and management believe
that Project CityCenter will be the catalyst for a new kind of experience on
the Las Vegas Strip, and forever change the way we view Las Vegas."
Jim Murren, President, CFO and Treasurer of MGM MIRAGE noted, "Our
financing plan for Project CityCenter calls for significant residential
proceeds to supplement our available borrowing capacity and free cash flow to
efficiently fund this major development, while maintaining maximum flexibility
for other expansion initiatives. We also continue to explore potential
partnerships and other financing vehicles to ensure the most efficient use of
capital. We expect to earn cash flow returns in the mid-teens on the net
project cost, which is considerably above our cost of capital."
The Company, along with its partner Turnberry Associates, is constructing
The Signature at MGM Grand, three 576-unit towers which are designed as condo-
hotels. Towers 1 and 2 are sold out, under construction, and are expected to
be completed in the second and fourth quarters of 2006, respectively. Tower 3
is also under construction, with available units being nearly fully sold out
at prices significantly above the first two towers. The Company believes that
these sales and pricing trends will continue with the residential offerings at
Project CityCenter.
Mr. Murren added, "Our belief in the Las Vegas residential market has been
confirmed with the very strong sales at The Signature at MGM Grand, where we
expect to record our 50% share of that venture's profit on Tower 1 in the
second quarter and Tower 2 in the fourth quarter, at approximately $45 million
and $60 million, respectively. Our estimated share of profits on Tower 3 is in excess of $100 million. We see residential development as a long-term competitive advantage for our Company, particularly given our substantial real
estate holdings on the Las Vegas Strip, and as a key component in future resort developments."
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