MGM Resorts International, the biggest casino operator on the Las Vegas Strip, reported a wider second quarter loss as it wrote down the CityCenter resort after the new project posted an operating loss.
The net loss was $883.5 million, or $2 a share, compared with $212.6 million, or 60 cents, a year earlier, the Las Vegas based company said today in a statement. The most recent period includes a $1.12 billion reduction in the valuation of City Center by MGM.
CityCenter, the $8.5 billion joint venture with Dubai World that MGM opened in Las Vegas in December, reported an operating loss of $128 million for the quarter, including a condominium writedown. MGM’s sales rose 2.9 percent to $1.54 billion.
In the statement, Jim Murren, chairman and chief executive officer, said: “The Las Vegas operating environment remains difficult, but as we expected, we are seeing a gradual recovery. CityCenter is seeing improved business activity.”
Excluding some items, the loss was 35 cents a share, the company said. Whether that figure was directly comparable to the 24 cent average adjusted loss expected by 20 analysts surveyed by Bloomberg couldn’t immediately be determined.
MGM fell 42 cents, or 3.7 percent, to $10.85 at 9:25 am in trading before the opening of the New York Stock Exchange. The shares rose 24 percent this year before today.
Cash flow, measured as adjusted earnings before interest, tax, depreciation and amortization, declined 16 percent to $305 million at MGM’s wholly owned properties.
As Las Vegas struggles to recover from a record two year slump, resort operators in the largest US casino and conference market have cut room prices, boosted special offers and increased overseas marketing to attract gamblers and vacationers.
MGM’s average daily rate at its 10 Strip resorts slid $1 in the quarter to $110, as it filled 93 percent of its increased number of rooms, compared with 94 percent a year ago.
Macau contributed Ebitda of $18.7 million, MGM said. The company owns the MGM Grand Macau in partnership with Pansy Ho.
In the only part of China where casinos are legal, overall gambling revenue surged 67 percent in the first half of 2010, and jumped 70 percent in July from a year ago.
MGM and Ho plan an initial public offering of their Macau venture later this year, the partners have said.
Yesterday, the casino agreed to a $950 million loan to refinance existing debt and provide added liquidity.
MGM is selling its 50 percent stake in Borgata Hotel Casino & Spa in Atlantic City, and last week agreed to sell the land beneath it to Vornado Realty Trust and Geyser Holdings for $73 million. The deal will close by the fourth quarter, according to a company news release.
The company agreed to exit Atlantic City in a settlement with New Jersey regulators after the Division of Gaming Enforcement found its Macau co owner Ho an “unsuitable partner,” largely because of concerns about her casino mogul father, Stanley Ho. Boyd Gaming Corp owns the other half of Borgata and runs the resort, and has the right to match any offers.
Casino growth in the Chinese territory exploded after the government ended Stanley Ho’s 40 year monopoly and let foreign companies, including MGM Resorts, Wynn Resorts Ltd. and Las Vegas Sands Corp, build to attract more mainlanders.
Last year’s second quarter loss was worsened by MGM writing off its loan to the M Resort that it can convert to partial ownership, and by costs for retiring debt.
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