Construction of Las Vegas hotel delayed, changed

08.01.2009, Lesen Sie hier den Bericht über «Construction of Las Vegas hotel delayed, changed».

Developers of the 67-acre CityCenter complex on the Las Vegas Strip said Wednesday that one of its boutique hotels would open a year late and be about half as tall as originally planned.

CityCenter Holdings LLC, a partnership between MGM Mirage Inc. and Dubai World subsidiary Infinity World Development Corp., said the Harmon Hotel & Spa would open in late 2010 without about 200 residential condominium units planned for the top 22 floors of the hotel. The rest of CityCenter - including a 150,000-square-foot casino, retail, luxury hotels and other condominiums - is on schedule to open by December, company officials said.

The Harmon's structure and 25-floor exterior will be finished on schedule, while completion of its interior with 400 rooms will be postponed, allowing the company to defer spending $200 million until next year.

MGM Mirage chief executive Jim Murren told The Associated Press that after considering how to deal with construction errors by its contractor, the company opted to reduce the scope of the project rather than spend more money and rush to get the Harmon finished on time with the condos.

Workers spaced steel reinforcements on 15 of 22 floors at different intervals from what the plans called for without clearing the change with building inspectors, Clark County officials found in September.

The problem affected the building's hotel portion but were fixed there. General contractor Perini Building Co. would not say how much the repairs cost.

Murren said CityCenter would discuss the problems with the contractors and work out what to do once the project is finished and final costs are settled.

CityCenter said 88 of the canceled condominiums were under contract to be sold and buyers are entitled to either refunds of their deposits or a contract for a planned unit at the Mandarin Oriental Las Vegas, Vdara or Veer Towers.

Without the Harmon condos, CityCenter includes nearly 2,400 units marketed as condos on the site.

MGM Mirage told investors when it reported its third-quarter earnings in October that CityCenter was looking to cut construction costs by $400 million. The company said Wednesday that the changes at the Harmon will save an additional $200 million.

CityCenter's total cost previously was $9.2 billion, but the cuts have reduced that to $8.6 billion.

Analyst Bill Lerner of Deutsche Bank said in a note to investors that the move shows MGM Mirage is moving aggressively to improve its debt and cash positions.

"We expect a lot more to come, like asset sales, perhaps in Michigan, Mississippi, New Jersey and Vegas," Lerner said.

MGM Mirage sold the Treasure Island Hotel & Casino on the Las Vegas Strip to billionaire Phil Ruffin for $775 million last month.

Celeste Mellet Brown of Morgan Stanley said short-term cost savings were good for the company. However - even though the condos were not selling fast - the long-term savings from the changes announced Wednesday are limited because CityCenter was marketing the 200 condos at $1 million each, she said.

"Canceling the project only saved $112 million while removing additional critical mass that would drive gaming and non-gaming revenue at CityCenter," she said.

Shares of MGM Mirage fell $1.44, 9 percent, to close at $14.52 on Wednesday.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

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