MGM Resorts hints at eventual sale of Crystals mall at CityCenter
21 February 2013
Think it’s expensive shopping at Crystals, the luxury mall at CityCenter?
Try buying the place.
MGM Resorts International CEO Jim Murren said prospective investors have contacted him about buying the Strip property. His company has received “a bunch of inquiries over the last six months,” he told Reuters, without saying what the deal could fetch.
Murren is not in the process of inking a sale, but the two-story, 500,000-square-foot retail hub is “the most attractive candidate” should his company sell portions of the CityCenter complex, he said.
Crystals opened in December 2009 with the recession in full swing and struggled its first few years. Still, Murren said it was designed to “ultimately” be sold.
“It could raise a tremendous amount of money for its owners down the road,” he told analysts Wednesday, according to a transcript of the conference call. “We’re not in negotiations today to sell it, but you have to believe that that’s something we think about down the road.”
Crystals, whose tenants include Prada, Hermès, Louis Vuitton and other high-priced retailers, had $5.2 million in operating income last year. That compares with an operating loss of $201,000 in 2011 and a loss of $12.3 million in 2010, according to MGM Resorts.
CityCenter also features the Aria and Vdara hotels and the Veer Towers condo complex. The 67-acre project is a joint venture between MGM Resorts and a subsidiary of Dubai World, a Dubai-owned holding company.
MGM Resorts, one of the largest casino operators on the Strip, is carrying a heavy debt load. At the end of last year, it had $1.5 billion of cash but roughly $13.6 billion of debt.
Through refinancing efforts in December, executives lowered the company’s interest costs by more than $200 million per year, Chief Financial Officer and Treasurer Dan D’Arrigo said in a statement Wednesday.
“We remain focused on reducing debt” and maximizing cash flow, he added.
Company officials have made other strides recently to generate large chunks of revenue from CityCenter.
In a $119 million cash deal, New York-based Ladder Capital and Florida-based Pordes Residential Sales & Marketing acquired 427 condos at Veer Towers in December, taking more than 60 percent of the buildings’ units.
After the bulk sale closed, the 37-story luxury high-rises were 98 percent sold.
A month later, the investors put 100 of their newly acquired units back up for sale.
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