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MGM Mirage attention turns to Atlantic City's boardwalk11 October 2007
By Howard Stutz
LAS VEGAS, Nevada -- With its development plans on the Strip well in hand, MGM Mirage focused attention Wednesday on Atlantic City.
The Las Vegas-based casino developer and operator announced plans for MGM Grand Atlantic City, a $4.5 billion to $5 billion resort development that would be the New Jersey gaming community's largest hotel-casino complex.
MGM Mirage President and Chief Operating Officer Jim Murren didn't dissuade comparisons to the company's $7.4 billion CityCenter project on the Strip, but stopped short of giving the development the CityCenter moniker.
"There is a lot of commonality in the development, such as cutting-edge design and architecture," Murren said. "We're using some of the same designers and architects that we're using at CityCenter."
The Atlantic City project initially calls for more than 3,000 hotel rooms and suites in three separate hotel towers, each with a different design and hotel theme. The hotels would share access to a casino that the company said would be the largest in Atlantic City with room for 5,000 slot machines and 200 table games. A 1,500-seat theater, restaurants, nightclubs and entertainment options, a spa, 500,000 square feet of retail and convention space are part of the initial design.
MGM Grand Atlantic City is planned for a 72-acre site in an area known as Renaissance Pointe, adjacent to the Borgata, which MGM Mirage owns in a 50-50 partnership with Boyd Gaming Corp.
The proposed resort still needs approval from New Jersey authorities who oversee development along the Atlantic Coast. MGM Mirage plans to file its Coastal Area Facility Review Act approval request by the end of the year or early next year. Ground breaking is expected sometime next year with an anticipated opening in 2012.
Gaming analysts immediately welcomed an MGM Grand-themed resort to the Atlantic City landscape.
"The announcement is consistent with our view that MGM is a catalyst story in the near term with an implied mandate from its largest shareholder (Los Angeles billionaire Kirk Kerkorian) to create value with its large land bank in Atlantic City and Las Vegas," CIBC World Markets gaming analyst David Katz said in a note to investors. "We expect further positive catalysts ahead and remain positive on MGM despite the recent run-up (in the company's stock price)."
Approximately 60 acres of the site will be used for construction of MGM Grand Atlantic City. Another 12 acres are reserved for future development, which may include residences. MGM Mirage also owns an additional 14-acre site in the Marina District.
CityCenter, which includes a 4,000-room hotel-casino as its centerpiece, along with boutique hotels, residences, shops and entertainment venues, is focused on a 2009 opening. Murren said the company was able to plan out its Atlantic City project on land the company acquired in 2000 when it bought Mirage Resorts for $6.4 billion.
Also, the company announced plans this year for other projects along the Strip, including a remodeling and expansion of Circus Circus and a joint venture with Kerzner Holdings to develop 40 acres on the corner of the Strip and Sahara Avenue into a hotel-casino that would anchor development on the Strip's north end.
"With CityCenter, we can see the light at the end of the tunnel," Murren said. "We know the cost and scope of the project and that has allowed us to give attention to Atlantic City."
Murren said the company isn't entering the market blind. Atlantic City is facing challenges from slot machine casinos in Pennsylvania and gaming development in New York, Delaware and other states.
"We believe the type of development will be a very compelling project in this market," Murren said.
Deutsche Bank gaming analyst Bill Lerner said the project would also help the market fend off regional competition.
"The addition of new, high-quality gaming and entertainment offerings could only serve to increase and diversify visitation to the city," Lerner said in a note to investors.
MGM Mirage owns the land underneath Borgata, considered the Atlantic City leader market in gaming revenues. Boyd Gaming operates the 2,000-room hotel-casino and shares in the profits with MGM Mirage. Borgata was expanded a year ago to give the property more casino space and several nongaming attractions, such as restaurants. A new 800-room hotel tower is expected to open next summer bringing Boyd Gaming's total investment at the site to $1.7 billion.
Boyd Gaming spokesman Rob Stillwell said the MGM Mirage project and Borgata would be attached by a "seamless connection," making the two resorts "the most compelling resort destination in Atlantic City." He said Boyd had always expected MGM Mirage to develop its Atlantic City land holdings.
"It was always part of the plan from the beginning," Stillwell said. "The announcement means the future is bright for Atlantic City."
MGM Mirage Chairman Terry Lanni said the project could open a new market for East Coast customers.
"Our company has carefully considered the possibilities for our landholdings in Atlantic City," Lanni said. "We believe the success at Borgata demonstrates the eagerness for further evolution of the nation's second-largest gaming market."
In addition to the Borgata expansion, Pinnacle Entertainment is planning a hotel-casino project on the site of the now-closed Sands, which will be imploded next week. Another site along the Boardwalk has also been targeted for future expansion.
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