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MGM Resorts chairman won't rule out selling Las Vegas properties

21 Feb 2013

By Howard Stutz
LAS VEGAS -- MGM Resorts International Chairman Jim Murren said the casino operator wouldn't be opposed to selling one or more of its properties in Las Vegas or elsewhere if the numbers were to pencil out.

"We have no plans, but I wouldn't rule it out," Murren said Wednesday in an interview following the company's fourth-quarter earnings conference call. "After a long and brutal recession that impacted Las Vegas, there are consistent signs of improvement and investor interest."

MGM Resorts operates 10 casinos on the Strip, as well as resorts in Northern Nevada, Detroit, Mississippi and Macau. The company also owns 50 percent of the 3-year-old CityCenter development.

On the conference call, Murren said the CityCenter partnership, which is half-owned by Dubai World, would consider selling nongaming assets, such as the Vdara Hotel and the Crystals retail, dining and entertainment center, to raise cash.

He said the company has been approached in the past six months about selling Crystals. A transaction is not imminent.

"Retail centers are trading high multiples," Murren said. "There is an interest in these type of investments."

Any proceeds would be used to pay down debt on the 67-acre CityCenter, which is at $1.85 billion, down from $2.5 billion a year ago.

Murren made it clear MGM Resorts was not cashing out of some markets as it looks to invest in emerging gaming jurisdictions, such as Maryland, Massachusetts and Toronto.

The company is spending $300 million this year on the Strip to upgrade several of its resorts. In addition, joint-venture partners such as the Light Group and Hakkasan are investing "hundreds of millions of dollars" on new nightclubs and restaurants inside MGM Resorts' Strip properties.

"I would say our goals are to reinvest in our assets that we own to drive higher cash flow," Murren said.

Several impairment charges in the fourth quarter sent MGM Resorts to a net loss of more than $1.22 billion. The company said results for the quarter that ended Dec. 31 masked what was a "transformational year."

Among the impairment charges during the quarter were a $366 million charge on MGM Resorts' undeveloped north Strip land holdings and a $167 million charge on the company's land holdings in Atlantic City.

In addition, MGM Resorts took a loss of $505 million that was related to the company's December refinancing transactions.

The net loss translated into a loss per share of $2.50. The one-time charges amounted to $2.27 of the net loss. In the same quarter a year ago, MGM Resorts reported a net loss of $113.7 million, or 23 cents per share.

Operationally, MGM Resorts said its total revenues of $2.3 billion in the quarter - no change from a year ago - included a 5 percent increase in cash flow for the company's casinos in the U.S. and a 1 percent increase in gaming revenues.

Murren said the one-time charges were necessary because they allowed for "major improvements in our financial position."

MGM Resorts Chief Financial Officer Dan D'Arrigo said refinancing transactions in December allows the company to lower interest expense by more than $200 million annually. MGM Resorts has $13.6 billion in long-term debt.

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