MGM Mirage writing down more than $1 billion on its 50 percent share

CityCenter is now worth about half of what it cost its development partners, MGM Mirage and Dubai World, to build it.

In a note to investors ahead of its November 5 earnings report, MGM Mirage said it was writing down more than $1 billion related to the massive, mixed-use Strip development, according to a report in theLas Vegas Review-Journal. Based on third-party valuations, the company estimated the value of its 50 percent portion of the project at approximately $2.44 billion.

CityCenter’s total construction budget is $8.5 billion.

MGM Mirage said CityCenter was required to have third parties review project’s residential inventory for impairment because of the company's recent decision to reduce the price of some 2,400 condominiums by 30 percent.

MGM Mirage said it would write down $955 million of its CityCenter investment in a pre-tax, non-cash charge, and its Dubai World partnership would take a $348 million non-cash charge. MGM Mirage suspects it will have to cover about $200 million of the write-down.

The 67-acre development, which has a 4,004-room casino hotel, four other luxury condo-hotel towers and a collection of high-end shopping, dining and entertainment attractions, opens in December.

Meanwhile, MGM Mirage’s largest shareholder, billionaire Kirk Kerkorian, has publicly expressed interest in divesting himself of his 37 percent stake in the company.

In a brief statement released through Tracinda Corp., his privately held investment arm, Kerkorian said he was exploring the possibility of strategic partnerships with respect to his MGM Mirage investment.

According to the filing with the Securities and Exchange Commission, Kerkorian controls more than 163 million shares.