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Cites Falling Value Of CityCenter

MGM Mirage loses nearly US$100 million in first quarter of 2010

eTN Staff Writer  Apr 16, 2010

MGM Mirage reported that it has lost about 22 cents per share in the first quarter, compared with earnings of 38 cents per share, US$105.2 million, a year earlier.

Casino and hotel operator MGM Mirage's preliminary estimates show it lost $96.7 million during the first quarter partly because it wrote down the value of its massive CityCenter development for a second time, the company said Wednesday.

MGM Mirage said selling the Treasure Island hotel and casino helped 2009's first-quarter results, while 2010's were hurt by the falling value of CityCenter's residential units.

The Las Vegas company said its estimate includes a charge of US$86 million related to that drop. It expects to report its full results in early May. MGM Mirage said it expects its net revenue for the period that ended March 31 to be about US$1.46 billion. That's 4 percent less than a year earlier, excluding its reimbursements for payroll and other costs to manage CityCenter.

MGM Mirage owns CityCenter with Dubai World, the real estate investment arm of the Dubai government. MGM Mirage manages the US$8.5 billion retail, casino, hotel, and residential complex.

MGM Mirage's profit has been hurt by the falling value of CityCenter before. Ahead of announcing its third-quarter earnings, MGM Mirage said in October that its report would include a US$955 million charge against the value of the development. MGM Mirage said then that its 50 percent stake in CityCenter was worth about US$2.44 billion as of September 30.

CityCenter had to reevaluate itself after cutting prices about 30 percent on its nearly 2,400 condos to parallel a decline in Nevada's real estate market since the units went on sale in January 2007.

The company also said Wednesday that it plans to raise up to US$750 million through a private offering of bonds due 2015. The company said it would use the funds to repay existing debt. The move is the company's latest effort to restructure its debt, which executives have said is a top priority.

MGM Mirage said it had about US$13 billion in debt as of March 31.

Forecasts from industry analysts polled by Thomson Reuters ranged from a loss of 11 cents per share to as much as 30 cents per share. Analysts on average predicted $1.5 billion in revenue. MGM Mirage estimates its operating losses at $11 million for the first quarter, including its share of write-downs on CityCenter.

The company said hotel occupancy at Aria - the complex's centerpiece - was 63 percent during the first quarter, and room rates averaged US$194 per night.

MGM Mirage said it expects CityCenter to report an operating loss of US$255 million for the first quarter, including US$171 million in non-cash charges related to the value of its condominiums.

MGM Mirage loses nearly US$100 million in first quarter of 2010
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