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Dubai World boosting stake in Vegas projects

September 12, 2007|From the Associated Press

Dubai World, a holding company for the Persian Gulf state of Dubai, is taking a larger stake in casino projects on the Las Vegas Strip with partner MGM Mirage Inc., the companies said Tuesday.

A subsidiary of Dubai World's investment arm, Istithmar Hotels FZE, will take a $300-million, 25% stake in a joint venture that MGM Mirage had announced in June with Kerzner International Holdings to develop a multibillion-dollar resort on the Strip, they said.

MGM Mirage will contribute 40 acres of a 78-acre parcel of land it owns, valued at $20 million per acre, for a 50% stake, while Kerzner will own the remaining 25% of the venture.

MGM Mirage will be able to take out $200 million in cash from the project after it is capitalized at $1.2 billion before debt financing.

The companies have entered into definitive agreements on the deal, they said Tuesday.

Shares of MGM Mirage rose $1.32 cents to $83.92.

Kerzner is to lead the planning of the project at Sahara Avenue and Las Vegas Boulevard.

Construction is to begin in the first half of 2009 and the property is expected to open in 2012, Kerzner International's chief executive, Sol Kerzner, said in a statement.

The project will occupy the northern end of a 102-acre parcel owned by MGM Mirage on the Las Vegas Strip that has the Circus Circus casino-hotel on the south end.

Billionaire Kirk Kerkorian's Tracinda Corp., a Beverly Hills investment firm, owns a majority of MGM Mirage.

Dubai World said late last month that it would invest more than $5 billion in MGM Mirage for a 50% stake in its $7.4-billion CityCenter casino mega-resort on the Strip and a 9.5% stake in the company.

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