Inside Asian Gaming

INSIDE ASIAN GAMING | June 2008 62 Briefs International Briefs Credit Crunch to Weed Out Weak Plans The credit crunch that is delaying some casino plans is nearing an end, even though it still may kill some poorly conceived projects, according to a panel of Wall Street experts. Speaking at the East Coast Gaming Congress, officials with Wall Street firms said credit is still available, although at a higher price. Joel Simkins, senior vice president of Macquarie Securities, was asked to compare the duration of the credit crisis to a baseball game. “I’d say we’re in the bottom of the sixth,” he said. “I think we’re nearing the end of the credit crisis. You have investors starting to come back and look at the sector, and you have vulture investors coming in to look at distressed properties.” In Atlantic City,proposed projects by Pinnacle Entertainment and Revel Entertainment have been affected by credit markets; Pinnacle has said it may abandon its Atlantic City plans if credit markets don’t improve within a year or two. Lawrence Klatzkin, managing director of Jefferies & Company, said he thinks both Pinnacle and Revel will ultimately build their Atlantic City projects. Revel CEO Kevin DeSanctis said his project is progressing on schedule for a 2010 opening. “An obvious question is does it still make sense to invest in this market,”he said.“Of course.” John Maxwell, managing director of Merrill Lynch, said credit markets are open now, although at a more expensive price for borrowers. He said the tighter credit has made gambling companies look more closely at their plans. “Maybe a new project in Atlantic City is not at the forefront of that,”he said. Within the next five years, all three panelists predicted even more competition in the East Coast gambling market, including the possibility of casinos or slots parlors in Massachusetts, Maryland and Ohio. MGM Moves Ahead with AC Project MGMMirage continues toworkwith its architects and is preparing to hire a construction contractor as it moves forward with plans for a US$5 billion mega resort in Atlantic City. MGMhopes to start construction this year on a development that would feature three hotel towers totalling 3,000 rooms, the largest gaming floor in town and 500,000 square feet of retail, dining and entertainment space. Chairman Terry Lanni said the company is refining the designs with its New York architect, Kohn Pedersen Fox Associates, and is in the advance stage of selecting the general contractor to oversee construction. Mr Lanni said the company is awaiting approval of a key construction permit from the New Jersey Department of Environmental Protection. Dubbed MGM Grand Atlantic City, the complex would open in 2012 on a 72-acre site next to Borgata Hotel Casino & Spa, which MGM already co-owns with Boyd Gaming Corp. MGM Mirage also recently announced that the cost of building its massive CityCenter development in Las Vegas has increased to US$9.2 billion, from the previous budget of US$8.1-8.4 billion. MGM Mirage spokesman Alan Feldman said the budget increase reflected continued rising construction costs development projects are experiencing nationwide. The new price also takes into account an increase in the value of the assets. Last year, Dubai World, the investment arm of the Persian Gulf state of Dubai, purchased a 50% interest in CityCenter. Other enhancements to the project’s budget include $1.7 billion for the cost of land, $2 million the company has spent on preopening expenses and $1 million for intangible assets. When the expected residential sales proceeds of $2.7 billion are factored into the equation, CityCenter has a net project budget of $8.5 billion. Lastmonth,constructionworkers toppedoffVdara,CityCenter’s 57-story non-gaming hotel and condominium project. At the topping-off ceremony, MGM Mirage officially revealed the name of CityCenter’s 61-story, 4,004-room centerpiece resort: Aria. Designed by noted architectural firm Pelli Clarke Pelli, Aria’s two curved glass hotel towers and its 150,000-square-foot casino space are expected to open in December 2009. Aria is expected to be topped off in August. CityCenterwillincludethreeotherhigh-riseprojects:theMandarin Oriental, Harmon Hotel and the residential-only Veer Towers, all of which are in various stages of construction. In all, the company has sold a little more than half of the expected 2,750 residential units. Rendering of entrance to Revel’s Casino in Atlantic City Rendering of MGM Grand Atlantic City