Some Good News for Struggling Vegas Development Market as CityCenter Clears Hurdle
- May 01, 2009
Las Vegas’ struggling development market is breathing a bit easier, now that co-developers MGM Mirage and Dubai World have buried the hatchet over the massive CityCenter mixed-use project there. The $8.5 billion development looks to be on its way to completion now that the developers have agreed to a deal with lenders for the financing of the remainder of construction.Dubai World, the real estate investment arm of the Dubai government, filed a lawsuit against development partner MGM Mirage in April after the latter ran into financial difficulties–both in terms of funding the CityCenter project, as well its overall company balance sheet. Under the new agreement, lenders will fund the remaining $1.8 billion needed to finish developing CityCenter. The mixed-use project on the Strip will feature the 4,000-room Aria hotel and casino, 500,000 square feet of retail and some 2,700 condos. With financing in place and the developers having kissed and made up, CityCenter is scheduled to open in stages between this October and December. But the market in which the development finds itself at that time will be quite different from when ground broke in 2005. Las Vegas has been stung by the twin thorns of over-development in the condo market and, more recently, the draining of tourism and gaming dollars as a result of the global economic slowdown. Add in the still-frosty lending climate, and it;s little wonder that many developments are struggling. Earlier this week, another Vegas project–the $3 billion Fontainebleau Las Vegas–was the subject of litigation, when its developers filed suit against a consortium of lenders accused of backing out of a promised $800 million in financing. For MGM Mirage, the firm is not out of the woods yet, despite the clearing up of the CityCenter issue. The company still has billions of dollars in outstanding debt it is working to restructure, and it could opt to sell some of its other Las Vegas assets–which include the Bellagio resort–in order to get its balance sheet in shape.