More Details Emerge on MGM-Kerzner Deal

LAS VEGAS-Greater detail emerged Tuesday regarding the MGM Mirage-Kerzner International JV formed earlier this week to develop a multi-billion-dollar integrated casino resort on 40 acres at the north end of the Las Vegas Strip. The property in large part was acquired earlier this year by MGM Mirage. While no specific plans for the property have been released, construction is slated to commence in the first half of 2009 and the project is slated to be up and running in the first half of 2012.

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.