MGM Mirage last week announced that its Board of Directors has approved the design and budget for Project CityCenter, its massive urban development at the heart of the Las Vegas Strip.
Project CityCenter will feature approximately 2.3 million square feet of residential space; a 4,000-room luxury hotel and casino; two 400-room, non-gaming boutique hotels; and over 470,000 square feet of retail, dining and entertainment space.
The overall cost of Project CityCenter is estimated at approximately $7 billion, about $2 billion more than estimated last September. Company officials say the price hike reflects increased building costs and an effort to make the project more suitable for a high-end clientele.
"We originally contemplated the casino hotel to be a mid-to-high end property," said Alan Feldman, MGM Mirage vice president of communications. "We’ve repositioned that to be very much a luxury hotel."
Feldman added that, after estimated proceeds of $2.5 billion from the sale of condo units, the net project cost will be approximately $4.5 billion.
Project CityCenter will be located on about 66 acres between Bellagio and Monte Carlo on the Las Vegas Strip, and will be connected to these resorts via a state-of-the-art people mover system.
Construction is expected to begin in mid-2006, and Project CityCenter will open in the fourth quarter of 2009. The detailed design phase of the project is still under way, and the budget, scope and timing of Project CityCenter are subject to change.
"The market for casino resorts and vertical residential space in Las Vegas is very robust," said Terry Lanni, chairman and chief executive officer of MGM MIRAGE. "We believe the most important aspects of successful casino resorts and residential and retail developments are embodied within Project CityCenter: location, brand and amenities.
"Our Board and management believe that Project CityCenter will be the catalyst for a new kind of experience on the Las Vegas Strip, and forever change the way we view Las Vegas," Lanni said.
Jim Murren, president, CFO and treasurer of MGM MIRAGE added, "Our financing plan for Project CityCenter calls for significant residential proceeds to supplement our available borrowing capacity and free cash flow to efficiently fund this major development, while maintaining maximum flexibility for other expansion initiatives. We also continue to explore potential partnerships and other financing vehicles to ensure the most efficient use of capital. We expect to earn cash flow returns in the mid-teens on the net project cost, which is considerably above our cost of capital."