ubai World is taking a larger stake in casino projects on the Las Vegas Strip with partner MGM Mirage, the companies said Tuesday. MGM will contribute 16 hectares of a 31.5 hectare parcel of land it owns, valued at us$ 20 million per acre, for a 50 percent stake, while Kerzner will own the remaining 25 percent of the venture.
MGM Mirage will be able to take out us$ 200 million in cash from the project after it is capitalized at us$ 1.2 billion before debt financing. The companies have entered into definitive agreements on the deal, they said Tuesday. MGM Mirage shares rose us$ 1.32, or 1.6 percent, to close at us$ 83.92.
Kerzner is to lead the planning of the project at the corner of Sahara Avenue and the Las Vegas Strip. Construction is to begin in the first half of 2009 and the property is expected to open in 2012, said Kerzner International’s chief executive, Sol Kerzner, in a statement.
The project will occupy the northern end of a 41.2 hectares area owned by MGM Mirage on the Strip that has the Circus Circus casino-hotel on the south end. A space in the middle will be left for a future development project, possibly with other partners, said MGM Mirage chief financial officer Dan D’Arrigo. "We think that could be a great campus on the northern end of the Strip over time," he told The Associated Press.
Dubai World said late last month it would invest more than us$ 5 billion in MGM Mirage for a 50 percent stake in its us$ 7.4 billion CityCenter casino megaresort on the Strip and a 9.5 percent stake in the company. The new investment would bring its total investment in the MGM Mirage to about us$ 5.4 billion.
As of March 2006, Dubai World, through Istithmar, also owned a us$ 3.9 billion, 20 percent stake in privately held Kerzner International, according to the Web site CapitalIQ. Dubai World is a holding company for the Persian Gulf state of Dubai.
Last month, a Dubai World subsidiary signed an agreement for control of the Barneys New York department store for us$ 942.3 million. A division of Dubai World also spent us$ 100 million this year to buy the QE2, the majestic ocean liner that has carried millions of people across the Atlantic during its 40-year history.