MGM writes down CityCenter - again
MGM Resorts International posted a loss of $883 million in the quarter ended June 30 on another massive write-down of the value of CityCenter.
The casino giant took a non-cash charge of $1.12 billion against its investment in the $8.5 billion resort complex on the Las Vegas Strip, which the company now values at $2.65 billion. It’s the third time MGM has devalued the resort.
The charge resulted in a loss of $2 per share in the quarter, despite the fact that net revenue increased over the same period last year, from $1.49 billion to $1.54 billion. Net revenue was down year-over-year in the first quarter.
The company reported a loss of $212.6 million, or 60 cents a share, in 2Q09. Excluding write-downs and other impacts, the loss widened to 35 cents from 12 cents.
Analysts polled by Thomson Reuters expected a loss of 24 cents on revenue of $1.46 billion.
Total casino revenue declined 6 percent, compared with a 12 percent drop a year earlier and a 5 percent drop in the first quarter.
CityCenter itself suffered an operating loss of $128 million in the second quarter, including a non-cash write-down of $57 million, on net revenue of $401 million, which included $56 million in forfeited deposits on luxury condominiums.
The complex opened in December.
Aria, the casino hotel at CityCenter, saw its hotel occupancy rate improve from 63 percent in the first quarter to 80 percent, largely the result of an 8 percent cut in the average daily room rate.
The quarter saw the company enjoy its first increase in revenue per available room since 2007, with ADRs at Bellagio and MGM Grand both improved over the same period last year.
The company attributed much of the increase to a rebound in convention business, which is up from a year ago.