Thursday, Oct 30, 2008

(This story was originally published on Wednesday.) 


   By Angela Pruitt 
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--MGM Mirage (MGM) is mulling a facility with joint venture partner Dubai World geared towards helping potential buyers of condo units at its $11 billion CityCenter resort in Las Vegas.

We've "been debating and talking about this for awhile," said Jim Murren, MGM Mirage's president and chief operating officer in a post-earnings interview Wednesday.

He said while the company wasn't prepared to flesh out all the details, it is "a very intriguing and probably a rewarding option to pursue."

As the largest privately funded development in the country, CityCenter has raised the bar for its competitors on the Las Vegas strip slated to be completed next year. The sprawling project includes a 4,000-room casino resort and about 2,650 luxury condominium and hotel/condominium units. The financing and completion target of CityCenter is a focal point for Wall Street as other casino operators delay major projects this year or have defaulted on debt or sought bankruptcy protection.

Murren said MGM Mirage has strong relationships in the banking community and noted that many banks have owned or acquired mortgage companies via consolidation in the financial market. In addition, he said Dubai World has their own mortgage company which has been effective in their ability to sell residential real estate in the Emirate.

Murren noted that over 60%, or about $1.7 billion of the CityCenter condos have been sold. Condo sales aren't a necessary financing component for CityCenter and doesn't factor in the company's ability to raise capital, he said. "The unit sales are important for...return on invested capital, but I think they can finance CityCenter with zero residential sales," said Bill Lerner, an analyst at Deutsche Bank Securities.

Lerner said they expected Dubai World would attempt to get licensed as a mortgage lender in Nevada and potentially write mortgages at CityCenter and that MGM Mirage is working on other financing programs to assist buyers in closing their contracted units. The goal is "to help people who have trouble securing loans and already have contracts as many banks either won't lend now for residential (properties) or will with onerous terms," he said.

Murren said any financing assistance will be targeted at condos falling lower on the high-end scale.

-By Angela Pruitt, Dow Jones Newswires, 201-938-2269, angela.pruitt@dowjones.com

(END) Dow Jones Newswires

30-10-08 0503GMT