Chairman of Dubai World-backed US$8.5bn CityCenter JV says buyers eyeing luxury mall
Buyers are reportedly vying for a luxury mall within the US$8.5bn Las Vegas casino complex co-owned by investment firm Dubai World, potentially raising a “tremendous” amount of money for the debt-ridden development.
Chairman of joint venture partner MGM Resorts International chairman Jim Murren said he had been approached by several buyers interested in CityCenter's Crystals luxury mall, which includes high-end fashion outlets Jimmy Choo, Hermes, Harry Winston and Gucci, Reuters reported.
CityCenter is the largest casino on the Las Vegas Strip but has struggled since opening in 2009 and Standard & Poor’s has said it may not be able to generate enough cash flow to justify its capital expenditure.
The project was refinanced in 2010, with the proceeds used to pay down debt and extend the due dates on loans used to build the complex.
Government-owned Dubai World is financially struggling and in recent years has undergone a major restructure and asset sell-off. Its refinanced debt requires US$4.4bn to be repaid in 2015.
Murren said the joint venture partners had always intended to sell Crystals mall. However, negotiations were yet to start.
"CityCenter is always looking for ways to improve the value for its shareholders... and I think the most attractive candidate down the road would be Crystals," Reuters quoted Murren as saying.
"We've gotten a bunch of enquiries over the last six months. Crystals could raise a tremendous amount of money for its owners.”
Murren said he expected CityCenter to reach its full potential in the next few years, indicating the company would hold onto the complex until then.
"CityCenter's higher cash-flow days are upon us. Its (Crystals) growth rate is very appealing and it has trophy assets. It's a very appealing asset at a time when real estate investments are becoming more coveted," he said.
MGM Resorts said CityCenter posted Q4 2012 earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$68m, up 17 percent from a year earlier.
Crystals had 2012 net revenue of US$54m, up from 2011 net revenue of US$46.3m.
One of the biggest privately financed developments in the United States, the 67-acre complex took five years to build. It opened amid the global financial crisis, when tourism to Las Vegas fell sharply.
The Las Vegas Convention and Visitors Authority said a record 40m people visited the casino-city last year, surpassing the 2007 record of 39.2m.