MGM Mirage Posts $212M Loss in Q2

LAS VEGAS-MGM Mirage lost $212.6 million or $0.60 per share in the second quarter due in part to impairment charges and less gambling. In the same period one year earlier, the casino company posted a profit of $113.1 million or $0.40 per share.

MGM Mirage says it incurred approximately $0.45 per share in one-time charges, including $0.34 per share for impairment charge and $0.11 per share for retiring $58 million of long-term debt early.

MGM Mirage, which owns 16 casinos, several of them on the Las Vegas Strip, has been focused on reducing debt and operating its properties profitably while also completing development of its $8.8-billion CityCenter project. The company’s CEO is Jim Murren and its largest stockholder is billionaire Kirk Kerkorian.

The company has cut its debt load by $1.1 billion in the past year, leaving it with approximately $12.3 billion as of June 30. The company’s cash at the time was $411 million.

Hotel occupancy for the quarter was 94%, down from 97% in the same year-earlier period. The average daily room rate was $111, down from $156. RevPAR (revenue per available room) fell 31% to $104 per $151.

Total casino revenue fell 12% to $625.6 million, due in part to lower table games play at its Strip casinos. Property EBITDA declined 34% to $357 million. Food & Beverage fell 13% to $357.9 million. Overall revenue fell 22% to $1.49 billion from $1.9 billion but was in line with analysts’ expectations.

On a conference call with investors Murren said the Vegas casino market is stabilizing and that MGM Mirage will be a much stronger company when the recession ends. That said, he added that the recovery will not be rapid. Mid-week convention business is still way down, he said, and will take years to fully recover.

CityCenter is set to open in the fourth quarter. Sitting between the Monte Carlo and Bellagio resorts also owned by MGM Mirage, CityCenter includes 6,400 hotel, condo and condo-hotel rooms in several high-rise towers designed by famous architects. The development has been under construction since 2005.

The project is on track to open in stages between October 1 and December 16. The 500,000-square-foot Crystals retail component will be between 65% and 70% booked by the time it opens on December 3, the company told GlobeSt.com in July. MGM Mirage is expecting retailers to generate sales of approximately $1,300 per square foot, with MGM Mirage retaining approximately 10% of the total.

The different towers include Aria Resort & Casino, the anchor project with 4,004 hotel rooms; three non-gaming hotels including Mandarin Oriental, Vdara Hotel and Harmon; and Veer Towers, the development’s only strictly residential development.

Sales revenue from some 2,700 condos was initially expected to total $2.7 billion, but a construction mistake killed plans for a couple of hundred condos that were planned above the Harmon Hotel, the only piece of the development that will not open this year as previously planned, and the recession has left a little less than half of the units unsold. Of the $1.6 billion in contracted condominium sales MGM Mirage expects to close on at least 75% of that total, sources at MGM Mirage have told GlobeSt.com. However, some condo buyers who agreed to purchase units at the top of the market are trying to void their purchase contracts because valuations have dropped below their contracted purchase prices.

Completion of the project was in doubt until three months ago, when MGM Mirage and Dubai World resolved their differences and received the $1.8-billion secured credit facility from lenders necessary to complete and open the massive undertaking, which includes its own monorail.