Per the agreement, MGM and Kerzner each formed their joint ventures that then formed a combined 50-50 joint venture. The MGM JV's land contribution to the combined JV, valued at $20 million per acre or $800 million, is being met by a $600-million contribution from the Kerzner JV, of which $200 million will be paid by the combined JV to the MGM JV such that each member's contribution to the combined JV is $600 million. The contributions must be made in full by spring 2009, according to the agreement.
Led by Kerzner, the combined JV will plan, develop, own and operate the integrated casino resort property. The parties expect that the combined JV will obtain project-specific financing from third parties to fund the development and construction costs not covered by the equity in the combined JV. The new resort will front the corner of Las Vegas Boulevard and Sahara Avenue, next to MGM's Circus Circus property and across Las Vegas Boulevard from the Sahara Hotel & Casino, which was recently sold for between $300- and $400-million to a new ownership group that plans to renovate and revitalize the 55-year-old, 1,700-room property.
The MGM JV, named IKM MGM LLC, comprises multiple MGM Mirage-owned entities. The Kerzner JV, named Kerzner Istithmar Las Vegas LLC, includes Kerzner and Istithmar PJSC, which is the investment company of Dubai World, a Dubai government entity that recently paid $2.7 billion for a 50% stake in MGM Mirage's Center-Strip integrated resort project called CityCenter, and also is acquiring as much as $2.4 billion of MGM Mirage common stock. The combined JV is named IKM JV LLC.
Certain actions will require the approval of the majority of the combined JV's six-member management committee, which includes three members appointed by MGM JV and three members appointed by Kerzner JV (two by Kerzner and one by Istithmar PJSC). MGM JV's appointees are MGM CEO Terry Lanni, MGM CFO Jim Murren and MGM president Ken Rosevear; The Kerzner JV's appointees are Kerzner chairman Sol Kerzner, Kerzner board member Paul O'Neil and Istithmar Hotels CEO Joe Sita.
Kerzner owns the Atlantis properties in the Bahamas and the One & Only-branded luxury hotel chain. MGM Mirage and Kerzner signed an LOI to form the joint venture in June , one month after MGM paid two different owners $576 million, about $17 million per acre, for 33.5 contiguous acres that abut MGM's existing assets there as well as Las Vegas Boulevard.
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