MGM Mirage, building the largest development on the Strip, plans to cut the price of condominiums it already sold to appease buyers after housing values collapsed, Chief Executive Officer Jim Murren said.
The casino operator, founded by Kirk Kerkorian, is reappraising the condos and talking to banks to help buyers arrange financing to complete purchases at the CityCenter development, Murren said yesterday in an interview. The company will announce details early in the U.S. fall season, he said.
“There’s no debate that the market has fallen dramatically in pricing since we initially priced these units,” Murren said in Las Vegas, where the company is based. Customers are asking for “a total marketing strategy for them, which includes financing.”
MGM built 2,400 condos at CityCenter, the $8.5 billion project on the Las Vegas Strip, and buyers who paid deposits have had trouble obtaining mortgages. Many have balked at paying the agreed-to price, after home values in the city fell 53 percent through May since August 2006, according to the S&P/Case Shiller Single Home Price Index.
Murren also said MGM Mirage will overhaul its marketing focus on convention bookings, pressing competition with Sheldon Adelson’s Las Vegas Sands Corp., Harrah’s Entertainment Inc. and Wynn Resorts Ltd. He said he anticipates a return to growth in Las Vegas in 2010, with a 10 percent increase in visitors following declines of 4.4 percent in 2008 and an estimated 7 percent this year.
MGM Mirage, which reports second-quarter results on Aug. 3, declined 39 cents, or 4.1 percent, to $7.10 at 2:02 p.m. in New York Stock Exchange composite trading. The shares had declined 46 percent this year before today.
The company will overhaul its MGM Grand Macau and may consider an initial public offering for the business when earnings improve, Murren said. The joint venture has the smallest market share of any of the six operators in the Chinese city.
CityCenter is a joint venture between MGM Mirage and Dubai World, a state-owned investor.
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