MGM Mirage Sees a City
Updated from 11:00 a.m. EST
MGM Mirage (MGG) is thinking big -- really big.
The casino company on Wednesday announced ambitious plans to create a 66-acre city within a city on the Las Vegas Strip between the Bellagio, which MGM Mirage owns, and the Monte Carlo, in which it holds a 50% stake. It also said the project had received approval from its board of directors.
The development plan, which MGM Mirage has dubbed Project CityCenter, includes casino space, a variety of hotels, retail shops, restaurants, nightclubs and residential space. MGM Mirage said the site is approximately the same size as three major New York City landmarks combined: Rockefeller Center, the SoHo neighborhood and Times Square.MGM Mirage shares ended Wednesday's session down 78 cents, or 1.3%, at $58.92. In what seems like an unlikely partnership of casino operator and urban planner, MGM Mirage has selected a master plan for the site from Ehrenkrantz, Eckstut and Kuhn Architects, which developed plans for Battery Park City in downtown New York City and Inner Harbor East in Baltimore. The project's first phase, which MGM Mirage expects will open in 2010, includes a 4,000-room hotel and casino, three 400-room boutique hotels operated by upscale hoteliers, about 550,000 square feet of retails shops, restaurants and nightclubs, and 1,650 luxury condominiums. "A project of this scope should be prudently implemented over time in phases," said Jim Murren, the company's chief financial officer, in the release. "Through the proceeds generated from residential sales as well as the equity contributions of our partners, we expect to rapidly de-leverage while providing significant new high-margin income streams." In an interview with TheStreet.com, Murren said preliminary estimates put the price of the project's first phase at "a little over" $4 billion. He said the company expected to generate about $1 billion by preselling residential properties, putting the net investment in the first phase at "probably not much more than $3 billion." MGM Mirage would pay for its investment in the project using several methods, Murren said. One would be to use free cash flow, which is more than $500 million a year. Another would be to sell assets. A third would be going to the capital markets. Given that the project is at an early stage, the company would spend "very little" over the next 18 months, Murren said. The project's second phase would be the creation of a residential neighborhood, including four towers with a total of at least 2,500 residential units, Murren said. "Our master plan represents a significant new direction for our city and our company," said Terry Lanni, chief executive of MGM Mirage. "Las Vegas has taken initial steps to becoming a major urban center in the western United States. Recent announcements of redevelopment plans for downtown and the university's vision of 'Midtown UNLV
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV