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Updated from 11:00 a.m. EST

MGM Mirage


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."

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In an interview with

, 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

The University of Nevada, Las Vegas ,' a cultural district surrounding the campus, perfectly complement our company's plans for our 'uptown' site."

MGM Mirage is in the process of acquiring

Mandalay Resort Group


for $4.8 billion in cash. The deal awaits regulatory approval, and the companies expect it to close by the end of the first quarter of next year. When that happens, MGM Mirage will own all of the Monte Carlo, which adjoins the Project CityCenter site.