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MGM buys parcels for new center

MGM Mirage, which is currently building the massive $7 billion Project CityCenter on 66 acres on the south Strip, has assembled the acreage to construct a similar and potentially larger development on the Strip's northern end.

The Las Vegas-based casino operator will announce this morning it has finalized two Strip land acquisition deals worth a combined $575 million that will give the company more than 100 contiguous acres for development stretching north from Circus Circus Drive to Sahara Avenue.

As part of the plans, MGM Mirage said it will refurbish the aging Circus Circus.

"This land assemblage creates a very interesting and exciting opportunity for our company to create an integrated resort complex on the north end of the Strip," said MGM Mirage President and Chief Financial Officer Jim Murren.


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  • MGM Mirage will spend $444 million to purchase a vacant 25.8-acre parcel from Gordon Gaming Corp., the current owners of the Sahara.

    The site, on the northwest corner of the Strip and Sahara Avenue, is one of the boulevard's last major undeveloped locations. It once housed the original El Rancho Vegas, one of the first hotel-casinos in Las Vegas, which was destroyed by fire on June 18, 1960.

    In addition, MGM Mirage is spending $131 million to acquire a 7.6 acre parcel from Concord Wilshire Partners, a Southern California real estate developer that had announced plans last year to build a hotel-casino on the oddly shaped site in conjunction with the publishers of Maxim Magazine.

    Both transactions are expected to close by May.

    MGM Mirage acquired Circus Circus and its 68-acre site in 2005 as part of a $7.9 billion buyout of the Mandalay Resort Group. Circus Circus includes the hotel-casino, a low-rise motel, the Adventure Dome theme park and a recreational vehicle park.

    The newly acquired land parcels, which average about $17 million an acre, connect with Circus Circus.

    "What's exciting about this purchase is that it fully unlocks the value of the Circus Circus land," Murren said.

    MGM Mirage expects to eliminate the recreational vehicle park and the low-rise motel, allowing for 44 acres to be combined with the newly purchased 34 acres.

    Murren said the 78 acres on the north Strip could hold the same potential as Project CityCenter, located between the Monte Carlo and Bellagio which began construction last year.

    The development will include a hotel-casino, boutique hotels, high-rise residential and a retail, dining and entertainment district.

    Murren said that unlike CityCenter, which MGM Mirage is financing, the company would take a different approach and seek partners to develop the north Strip location.

    "We had so much interest in CityCenter from so many different resources that we believe this development allows us to bring in new financial and strategic partners," Murren said.

    "We have an opportunity to bring into the mix new ideas, new brands, new customer bases and new marketing approaches. There is such an increased level of interest to get into Las Vegas, that we believe entities will want to partner up with MGM Mirage. This will create an opportunity for our shareholders to monetize a fair amount of our real estate holdings."

    Murren said an enhanced Circus Circus would play an important role in the new development. The casino's customer base, he said, is expanding. Casinos that cater to the middle income customers, like the Stardust, have been eliminated from the market and others are expected to soon follow.

    He said the 3,700-room casino, which generates about $80 million annually in cash flow, would receive a makeover.

    "We intend to do with Circus Circus what we've done with the rest of our properties," Murren said.

    GM Mirage operates 10 casinos on the Strip, more than any other gaming company.

    "We're going to put some money into it and enhance and expand it over time," Murren said. "Circus Circus will be a gateway to our new development, similar to what Monte Carlo is to Project CityCenter."

    Murren didn't yet have a timetable for the north Strip development but said it was conceivable work could begin before CityCenter is completed.

    Gaming analysts have targeted development opportunities on the northern end of the Strip as the next wave of potential Strip development, stretching from Convention Center Drive to Sahara Avenue.

    In March, Los Angeles-based SBE Entertainment Group, in partnership with San Francisco-based Stockbridge Real Estate Funds, agreed to acquire the 1,720-room Sahara and its 18-acre Strip parcel from Gordon Gaming for an undisclosed price.

    Sources said the deal was valued at between $300 million and $400 million. The transaction is pending approval of Nevada gaming regulators.

    John Knott, executive vice president of the Global Gaming Group for CB Richard Ellis, which handed the sale of the Sahara to SBE and the vacant site to MGM Mirage, said the casino company might have been spurred by the Sahara deal.

    SBE Entertainment has said it plans to renovate the resort, adding nightclubs, restaurants and other enhancements.

    "When they saw what (SBE) is planning, I think that might have motivated them along," Knott said. "There is a lot of activity all of a sudden on the north end of the Strip."

    Boyd Gaming Corp. is expected to unveil designs by June for its $4.4 billion Echelon development that will be constructed on the site of the demolished Stardust.

    Earlier this week, the company planning to build the $2.8 billion Fontainebleau sold a nearly 20 percent ownership to Australia's largest gaming operator, increasing the likelihood the announced 63-story, 3,889-room hotel and casino could soon be under construction.

    "There has been a great deal of energy injected into the north end of the Strip and our 78 acres could be right in the middle of all that," Murren said.

    He added the company had taken an interest in the Sahara land a few months ago.

    The Sahara's vacant land parcel was one of three locations in conjunction with the casino that was controlled by Gordon Gaming, which was founded by the late gaming pioneer William Bennett when he bought the aging resort in 1995.

    Gordon Gaming still controls an 11.3 acre parcel on Paradise Road across from the Sahara that Knott said remains on the market.

    Concord Wilshire spent $90.25 million in 2005 to acquire four small parcels that made up the site acquired by MGM Mirage. The developers ran into opposition from the owners of Sky Las Vegas, a neighboring high-rise condominium development because the Maxim might have blocked views of Sky residents.



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    Jim F wrote on April 21, 2007 05:09 PM: I am glad to see someone like JJ can understand things as they really are. First of all David, I don't own any MGM stock nor do I have any affiliation with them in any way. You jumped to conclusions again and your paranoia is getting the best of you again. Your comparison about the stereo is like apples to oranges, makes no sense. I don't mean to get personal, only to express candor and be bold. Bottom line, their is no conspiracy theory that corporations are out to destroy human kind. Please don't take this personally, but you would never be able to build a successful business. You cant step back and apply critical thinking skills. I guarantee, and would bet my paycheck, that the majority of employees who work there feel it is a privilege to be employed. Open yourself up, think to your self what benefits would come from a corporation investing money in growth...maybe a better standard of living for its stakeholders. Ignorance is blind, open your eyes and try to see the possibilities. I bet you are the type that thinks should never change and always stay as they are.


    alan berk wrote on April 20, 2007 01:39 AM: With all of that building on the Strip i can only hope all of the workers at those hotels are going to be smart enought to live close by to where they work!!!!

    Or are the continue to act like lemmings and live in the Nortwest or Mountains edge!

    I can get to any of those hotels in 15 minutes or less from my house at dandhill and Harmon..

    There arethousands of houses already built between las vegas blvd and boulder hi-way- Why would you live anywhere else.

    think of the Gasoline you will be saving- No long commute fighting all of that traffic!

    Wake-up and realize commuting is stupid!


    J.J. wrote on April 20, 2007 12:02 AM: Oh my gosh! Get real! How many places in the united states can a waitress have a union pension? How many maids can afford to buy a new (And really nice) house? The next time you are out and about in phoenix and see a security guard, ask him how much he makes. I'm not sure what the amount will be, but I'll bet it's under $10.00 an hour. Contrast that with here where hotels that start security off at $10.50 an hour are having a tough time getting staff, because the new properties are starting at $12.00 an hour and topping out after 5 years between $15.00hr to $19.00hr. And top this all off with a human resources process that, for non-union workers, will put to shame most unions in other states. Oh and look up how much money they have spent on corproate diversity training, corporate charity that the company funds so 100% of donations go directly to charities. No, they are not perfect and yes they try to eek every penny out of everything, that's their way. I won't speak about Macau, because, unlike some people, I won't talk about things I know nothing about.


    Barry Berlin wrote on April 19, 2007 08:30 PM: MGM is the company which spoon fed amphetamines to Judy Garland, a well paid wage slave.
    Currently, messrs Feldman et al are engaged in exploiting the young women of Macau by supplying them to wealthy Asian gamblers. If it were possible to install slot machines in the womb, MGM would have mothers to be signing over the rights to their fetuses future earnings. Having shareholders is no excuse for corporate gangsterism. At least when Benjamin Siegel founded this city he did not attempt to disguise his motivation. Peope who are hourly employees of MGM Mirage are underpaid, overworked, and subjected to a myriad of nonsensical rules to keep them controlled. Pox on MGM


    Barry Berlin wrote on April 19, 2007 08:21 PM: MGM is the company which spoon fed amphetamines to Judy Garland to keep her a perky but well paid wage slave during the 1940s. The ownership may have changed but if MGM could install slot machines in the womb they would have pregnant women sign away their fetuses future earnings. The people who work for them on an hourly basis are underpaid, overworked, and bullied. Currently, MGM is actively engaged in exploiting the people of Macau by supplying underage prostitutes to their preferred customers in Asia. Messrs Feldman et al care only about money. Corporate gangsterism is worse than the original gangsters who founded our fair city because today the crooks cloak themselves as businessmen. Having stockholders is no excuse for the amount of human misery created by this company. Not only that, but have you seen KA?


    J.J. wrote on April 19, 2007 04:05 PM: Look, here's the thing. Yes MGM/Mirage is a corporation, but as many of it's upper management will tell you their job is to increase revenue and decrease costs. They also know that they must compete with other corporations that are on the strip, and around the world. The truth is that this is good for Las Vegas. Anybody that has spent any time at all around that area on a Saturday night will tell you that it's not a very nice place, so putting a beautiful hotel with all that goes along with that will be nice.
    Another thing is that I agree with the comment that if a person is not happy they should get an education, well if you work for MGM/Mirage you can get tuition reimbusement to get that education, along with 401k, Health Insurance, Life Insurance and when you see your corporation building other hotels, you have reasonable job security. Please, if you don't like it here, leave! Go to California and see how good you do with gas prices inching towards $4.00 a gallon. Grow up!


    David Huntington wrote on April 19, 2007 02:45 PM: David, when you budget your paycheck each week, don't you appropriate your money that suites your interests. Or do you spend more money than you have to because it benefits someone else more then you. Typical ignorant thinking. Get over it dude!

    A rather ignorant comment. When I make purchases for myself, I DO consider the impact on others. I don't go out and buy a stereo that will blow the windows out and keep my neighbors awake. I don't park my car in such a way that inhibits others to park theirs. I think of others in my decisions. Does MGM or any other gaming entity think of the impact on others before making their decisions? You must be a shareholder of MGM stock.


    Jim Fitzgerald wrote on April 19, 2007 02:34 PM: I think everyone should quit bashing MGM. First, if you feel they don't pay enough, go better yourself. Get an education or do something instead of complaining your not getting enough. If you feel they don't pay well enough, don't work for them! Second, I think it's pretty bold to make a statement that MGM doesn't care about people. Sounds like someone is a little insecure. The company is in business to make money and maximize share holder wealth while being cognizant of the social impact of it's decisions. David, when you budget your paycheck each week, don't you appropriate your money that suites your interests. Or do you spend more money than you have to because it benefits someone else more then you. Typical ignorant thinking. Get over it dude!


    David Huntington wrote on April 19, 2007 12:45 PM: MGM cares nothing about the people of Las Vegas. Was a traffic study even done to address impact on the Strip areas around City Center and now the North end of the Strip? MGM doesn't care about anything except for the dollars it brings in to increase the bonus and stock options for the arrogant execs running our town in their best interests.


    Roseann Majors wrote on April 19, 2007 11:19 AM: MGM and the other fascist corporations which have taken over from the gangsters who were in charge before care nothing about the people who work for them. The only reason they pay a living wage to hourly employees is because they are unionized. This newest MGM project will provide jobs that will perpetuate poverty amongst it's workers and help to develop even more robotic slot machine fanatics. MGM could care less about the damage that its' glorification of liquor and video poker does to the people who live here. MGM made "Gone With The Wind" in 1939 as the greatest glorification of slavery ever filmed. Now it produces its' own slaves and drones. In Macau, MGM is providing underage prostitutes to its' clients and if they could get away with it they would inject every Nevadan with heroin and wire them to a slot machine.


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