will often asks this question. MGM has released it's first quarter results. So what do you think?

The way I see it, they brought in some high rollers for a look-see. We will have to wait and see if those whales come back or go to another MGM property.

So far, the non whales are non impressed. The tourist on the street does not like walking to Aria. The tourist in a car does not like parking there. It makes a nice walk through with few reasons to return.

With Aria barely getting 60$ occupancy on a grand opening quarter, I don't know if that is a passing grade or not. I think new rooms are coming on line faster than the economy is recovering and Aria needs more than a little fine tuning.

Thanks, JMT! I've got some new CC/Mirage info that I'll be posting this morning.

CC info as of May 9, 2010 ......

Las Vegas's City Center resort lost a lot of cash during its first full quarter of operations.

The $8.5 billion City Center is jointly owned by MGM Mirage and Dubai World.

The project consists of six towers filled with luxury condos, a 150,000-square-foot casino and three hotels, in addition to an upscale mall.

CityCenter struggled to fill its 4,000-room luxury hotel (Aria) after opening in December 2009. , Aria, had an occupancy rate of 63% for the first three months of the year which is 22 percentage points below the 85% rate for MGM Mirage's nine other Las Vegas Strip casinos during the first quarter.

So far It has only been able to finalize sales of about 100 of its 2,400 luxury condominiums.

CityCenter is in a dispute with its chief contractor, Perini Building Co., over approximately $500 million in construction fees.

In the first quarter, City Center recorded an operating loss of $255 million. That loss includes a $171 million write-down in the value of the project's condos.
The company took back $24 million from buyers who forfeited their deposits on condos.

Before accounting for the write-downs or other charges, City Center incurred a loss of $32 million.

The MGM Mirage reported a first-quarter loss of $96.7 million compared with a profit of $105.2 million a year earlier. Much of the loss was caused by City Center.
So far, investors have been patient, expecting that the property—and the company—will benefit from a Las Vegas recovery but the Las Vegas region continues to lag other big hotel markets.

More to follow …..

In my own humble opinion (and I hope I am wrong) - Everyone is being overly optimistic when it comes to forecasting the not too distant future,

I would not be too surprised to see some casinos closing down during those hours when they have relatively few customers.

But weekends still appear to be pretty lucrative for most casinos,

And at present the casinos are offering lots of incentives to get you inside the spider trap.... free money and other free stuff of every description.

I usually spend at least two full days collecting 'free stuff' each month.

But even now some of the smaller local casinos only offer table games during certain hours of the day and evening.

Now I'd be interested to discover just how much business the locals are giving City.
Center. I have yet to see any bargains there and the table minimums are usually $15 whenever I hurry through. And I've never seen more that a dozen people in the Aria buffet.


Personally, I don't know of any local who visits the Strip unless they have guests in town or just want a cheap and decent meal at Ellis Island .... on Koval Lane one block east of the Strip.

I only go down to the Strip to see if the business is picking up or to see the upgrades at the Tropicana or the new construction at the Encore. And that is usually only an hour or two each month.

Locals know that you get a better bang for your buck at local casinos off the Strip.

I could easily be the exception, but it is not unusual to find me on the strip 4 times a week. Between shows, conventions, and dining, I hit the tourist areas pretty hard.

I can appreciate people having a cheap meal at Ellis Island. My life doesn't revolve around cheap though. I want a good value. If I pay a cheap price, it's hard to be disappointed. I don't mind shelling out hard earned money for quality results. For instance, on the high end, I often try the monthly special at the Palm steakhouse, where $50 gets me a meal that I think is worth much more. Sometimes I buy gift certificates to make a very expensive meal a good value.

I've given up trying to look for a good value at City Center. Their $100 steaks aren't worth $50. Their $50 steaks are worth about $25. Did you know there is a PUB in Crystals that has nickel beer? It's PBR draft, but it's beer. It's only one night a week...Tues or Thur...one of those two. City Center is a fun place to take pictures. It does little else for me.

I was on the strip tonight, and have plans for a night on the strip, on Paradise Rd, and downtown this week. And I have high priority plans to ride the new ACE bus, visit the Stratosphere, and take a drive through Lake Mead and Valley of Fire. I kinda got an urge to take the jump off the Stratosphere on their new ride.

On the non-tourist side, I plan to photograph some mid century modern architecture, take pictures between the Huntridge area and the Stratosphere, eat at Luv Its Frozen Custard, and visit some very old parks. Also, Jerry's Nugget is high on my list to stop by.

I don't throw money around carelessly when I'm out. I do tip well for good service and tip poorly for bad. I like to think that I help the good restaurants and good employees, and don't help the big business bottom line that much. I generally don't gamble or drink much when I go out.

Thanks for the above post, JMT.

For any of you folks who may be interested in the status of City Center, I refer you to the following regarding funds (reported as $500,000,000) owed by MGM Mirage to its contractors and what is being done about it:

Interesting 'stuff' is happening!

http://www.facebook.com/pages/Citizens-Holding-MGM-Accountable/105988129444480?ref=AdWords

Who are the 'Bad Guys"?

MGM Mirage is in dispute with Perini Building Co. over the payment of $500 million in CityCenter construction costs.

This dispute also involves numerous sub-contractors consisting of minority- or women-owned businesses that were brought into the CityCenter project by MGM Mirage as part of the company's diversity hiring program.

MGM Mirage required Perini, CityCenter's general contractor, to award more than $800 million in subcontracts to minority- and women-owned businesses.

"Our issues are not with those firms. Our issues are with Perini," Murren said. "Those firms have signed contracts with the general contractor."

Murren said it bothers him that small local businesses are caught in the middle of the dispute.

Perini asked Gov. Jim Gibbons and other elected officials to intervene in the matter. A spokesman for the governor said the office's legal counsel was examining the letter from Perini executives.

SO ....I will go to court which the debt gets deeper and the lawyers get very rich in the process.

Is it possible that the only Bad Guys are those lawyers?

will, have you ever listened to Murren? He has done plenty of interviews, especially as City Center opened. He gets paid a lot of money to say certain things, and he has said it so much that I think he actually believes it.

OTOH, I'm sure the documentation in the Perini deal is so confusing that it takes groups of lawyers to sort it out. So I'm not taking sides on this yet except to say Jim Murren has little or no credibility. I don't know enough about Perini to know what their credibility is.

JMT, No, I've never heard Murren speak, but I did read a 'humorous' comment of his about not being around too much longer.

I've learned in dealing with real estate to always speak as if prosperity is just around the corner and that there is never a bad real estate investment. (Say goof things and good things happen!)

I used to believe that once myself and it might be somewhat true over the 'long term' but there are just too many days between now and when we reach that 'long term' day.

And I think that will be his downfall.

Plus the fact that a lot of individuals who helped to build CC have yet to be paid.

I sure don't know all the details about this $500,000,000 that is supposedly owed to Perini and the sub-contractors by MGM, but from what I do know, the following solution seems simple enough and would save millions of dollars in legal fees.

MGM should simply pay all those sub-contractors that have completed their part of the job satifactorily. Pay them and be done with that part of the problem.

MGM states that the problem is with Perini and not the sub-contractors. But those sub-cotractors apparently worked for the contractor (Perini) whom MGM is refusing to pay.

If and when those sub-contractors are paid, legal proceedings should determine how much money MGM should pay to the contractor (Perini) and insure that those funds are paid within 48 hours so that there can be no further complaints from either side,

If I am not mistaken the big problem between Perini and MGM is the Harmon portion of the CItyCenter project but under the present circumstances, I think MGM will also introduce many other problems before this situation is resolved in court.

I have heard that an early and simple solution is not in the best interest of the lawyers, so it will probably get very complicated and drag on for a good long time.

Only my personal opinion though.

will, I hope you read the 13? page letter that Perini put in the LVRJ. It was a fun read.

Also to put the first quarter in perspective for the rest of the industry, here are some numbers I found on other places. Gains and losses in millions.

Hard rock 26.5 loss

Las Vegas Sands 28.9 loss

Tropicana 7.7 loss

Stratosphere 2.7 loss

Stations 53.5 loss

Parent company of Riviera 4.5 loss

Boyd 8.4 profit

Wynn 27 profit

Golden Nugget profit???

JMT, I did not read it but will look for it. Thanks.

And.... I'm not surprised by those loses.

But good to see the two profits.

No mention on City Center?

will, the letter is kinda hard to find as Perini paid to have it published, much like an ad. Here's a link....

http://media.lasvegassun.com/media/pdfs/blogs/documents/2010/05/05/periniletter0505.pdf


For everyone, it is a very interesting read.

Thanks, JMT. I read it in its entirety and although there are two sides to every story; I find myself on Perini's side.

But I retain the right to change my opinion as this battle proceeds.

Thanks for sending the letter, JMT.

What side do you favor at this precise period of time?

Do you think anyone in their right mind would purchase a CityCenter condo under the present circumstances? And I wonder if these facts were disclosed to those Buyers who have purchased and closed units within City Center.

I'm somewhat surprised that the unions have yet to get involved. Is there a reason for that?

More to comment on .... but I'll save it for later.

Thanks again, JMT.

JMT, ya know? When you give this Perini/MGM situation some deep thought, it appears that Mr Murran is following the only course of action that he can take in an effort to make CityCenter successful.... but he is failing miserably.

But only time will tell.

A man in his position would never want to make anyone or any company involved in the project look bad while the project is being developed due to the fact that it would have a bad affect on the condominium sales and other important factors.

The old real estate way of not doing or saying anything which would garner adverse publicity during the project's development phase appears to have been adhered to rather closely until the Harmom structural problem reared its ugly head and became public concern.

Now all this adverse who-pays-who publicity will definitely have an adverse affect on the entire CityCenter project.

In the long run it would have definitely saved millions of dollars if all parties had come to some form of a mutual agreement (arbitration?) when payment was due and payable.

I personally think that we will soon be seeing new leadership within MGM Grand.

It is also interesting to note that some condo apartment owners within another Perini project (I think it's called 'Queen's Gate') are also presently complaining about Perini's post construction 'tactics', but I would definitely not be surprised if those same folks proved to be friends with the MGM folks or MGM stockholders at least.

I do think that this will get to be a lot more interesting before it settles down and that a good number of legal folks will be laughing all the way to the bank but never in the presence of those who pay them - if in fact they do get paid!

The following info was gathered from the LVRJ ...

As of mid-May, 2010, 125 CC residential units inside the Mandarin Oriental and Vdara have closed fot a total of $117.7 million in sales.

(Mandarin Oriental closed 32 units for a total of $67.7 million).

(Vdara closed 93 units for a total of $50 million).

The Mandarin has 227 condo units.
The Vdara has 1,495 condo-hotel units.

Veer Towers (670 units) have not yet started closing.

Eight of the Mandarin units sold for over $3 million each.

CityCenter therefore has 2,392 residential units of which 125 have closed.

If these figures are accurate 5.2% of CC’s residential units have closed.

Does anyone know how many of those 2,267 remaining residential units are still in escrow waiting to be closed?

How many have sold?

And how many CC residential units are still available for sale?

Coming up next .... My recommendations for a possible solution.

On June 9 @ 10 AM MGM will hold a meeting with the CityCenter sub-contractors in the Aria Hotel Casino.

Should be interesting.

My possible solution ..... and a bit of related stuff.......

If you've ever purchased a condo apartment you realize that you are obligated to pay the monthly "maintenance fees" in addition to your mortgage, utilities, and taxes.

Those maintenance fees could possibly include the utilities (unless each unit is separately metered), taxes, etc.

Monthly maintenance fees are computed by a team of qualified real estate/ accounting experts who compute the entire cost of operating and maintaining the entire building and the grounds on which it sits.

Based on my personal but very limited experience, each individual owner within the complex has a percentage of interest which is computed by dividing the square footage of his apartment by the total number of square feet in the entire project.

This then shows the percentage of interest that each individual apartment owner has within the entire project and the percentage of the building's expenditures that he would be obligated to pay.

But it gets a bit more complicated when there is a residential/hotel mix, because there are usually 'debates' over such issues as valet service, common area maintenance, and way too many more complication as to whom is responsible for various expenditures - the residential owners or the hotel operation.

I am a bit familiar with a couple of residential/hotel projects in which the owners' association was represented by a Board of Directors which was overloaded with members who owned the vast majority of the hotel "apartments" so the majority of that Board's decisions were made in favor of the hotel operation to the detriment of the individuals who resided in the building as their principal residence.

I have no idea what the monthly maintenance fee is for each residential unit within the various CC buildings, but I am sure it is quite high and a huge expenditure for MGM each month because MGM has to pay that percentage of interest for each apartment until that apartment is sold.

And there are usually related maintenance problems in any mixed-use building and it would be interesting to learn if CityCenter has figured out a way to solve the usual maintenance fee issues.


Sorry for that long winded dissertation.

Here's the short SOLUTION comment regarding the current residential unit sales situation.

Has anyone ever considered the Timeshares possibility?

I think Veer Towers would be one great timeshare endeavor.

MGM says they will pay the contractors ASAP, after meeting with the Love Gov.

I'd guess it isn't over yet.

JMT, I'm thinking about making an attempt to get into that MGM - Sub-Contractor's meeting. I think it will be interesting with a lot of adverse opinions.