MGM Mirage To Cover Citycenter Shortfall

LAS VEGAS-MGM Mirage late Thursday agreed to partially guarantee the late 2009 completion of its $11.2-billion Citycenter project on the Las Vegas Strip by committing to cover an approximately $600-million financing shortfall. As previously planned, MGM and Dubai World also each agreed to make additional equity contributions of $959 million.

The partnership last month said it had $5 billion left to spend toward completion of the 19-million-square-foot development, of which $3 billion was to be financed and $2 billion was to be covered by additional equity contributions by MGM and Dubai World. Of the $3 billion in financing, MGM Mirage said it had secured $1.8 million in financing and had commitments for an additional $500 million, leaving a $700-million shortfall, which it has been seeking to make up through a syndication process that began in October. MGM’s $600-million commitment in addition to the $959 million in large part ensures the project will be completed if the $700-million cannot be financed.

Rising on 67 acres between the Bellagio and Monte Carlo resorts, the massive endeavor has been under construction since 2006 and is scheduled to open all at once in late 2009. All told, the development includes more than 7,400 hotel and condominium units in multiple high-rise towers plus the Crystals, a 500,000-square-foot retail and entertainment district, a resident Cirque du Soleil show celebrating the legacy of Elvis Presley and its own monorail to move people between MGM’s three neighboring resorts.

The actual gross cost of Citycenter is $11.2 billion. In its first quarter report, MGM Mirage pegged the net project budget at $8.5 million–after an expected $2.7 billion in residential sales, of which about 65% has been realized. The gross project budget includes $9.2 billion for construction costs (now $9.3 billion including capitalized interest), $1.7 billion for the land, $200 million for pre-opening expenses and $100 million of “intangible assets.” As of August, approximately 54% or 1,421 of the 2,700 condominiums have been sold for $1.75 billion.