MGM Mirage Completes Treasure Island Sale

LAS VEGAS-Casino operator MGM Mirage said Friday it completed the sale of its Treasure Island Hotel & Casino to an entity of billionaire Phil Ruffin for $775 million, which includes $600 million in cash and a $175-million 36-month secured note bearing interest at 10%. With hope receiving the remainder of the purchase price early, MGM Mirage gave Ruffin Acquisition LLC the option to repay the note on or before April 30 for a $20 million discount.

Ruffin appears to have made a pretty good swap. In 2007, he sold for $1.2 billion a 35-acre property on the Strip that was generating so little cash flow that the new owner opted to tear it down instead of operating it. This year, he pays $775 million for an 18-acre property on the Strip that generated EBITDA of $101.1 million in 2008, down from $128 million in 2007, and $ 376 million in net revenues, down from $431 million in 2007. Fourth quarter EBITDA in was $20.3 million, down from $29.7 million in the same year-earlier period.

TI has 2,885 guest rooms and an 87,000-square-foot casino. Ruffin reportedly plans to keep the property’s 3,200 employees and management at intact, as well as the Cirque du Soleil and pirate shows. TI’s occupancy in the fourth quarter was 92.2%, down from 96.6% in the same year-earlier quarter, while its ADR was $119, down from $142, and its RevPAR was $110, down from $137.