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LAS VEGAS-Completion of one of six towers under construction at the 18-million-square-foot Citycenter development on the Las Vegas Strip is being delayed and the condominium component has been killed. MGM Mirage is developing Citycenter in a 50-50 partnership with Infinity World Development Corp., a subsidiary of Dubai World, a conglomerate controlled by the government of Dubai. The $11-billion development was heretofore slated to open all at once in late 2009.

Completion of the Harmon Hotel & Spa (the far right tower in the rendering), heretofore planned as 200 condos above 400 hotel rooms in a 49-story tower, has been delayed until 2010 and compressed to 25 stories. The condominiums were to occupy the top 22 floors of the building.

In making the announcement Citycenter CEO Robert Baldwin said the canceling of the Harmon’s condo component preempts “the need for substantial redesign…resulting from contractor construction errors” that included workers spacing steel reinforcements a majority of the floors at intervals different from the plans.

MGM Mirage stated that the changes along with other cutbacks would save $400 million and delay an additional $200-million in fit-out costs but did not say how much it is giving up in condo sales revenue. An MGM Mirage spokesman did not immediately return queries seeking additional detail; the company has not yet filed anything with the SEC regarding the matter.

“This is an appropriate action in the current circumstances,” added Infinity World chief executive Chris O’Donnell.

The Harmon’s would-have-been residences were the last of the 2,700 condos at Citycenter to be released for sale. About 88 of the 200 condos had been pre-sold, according to MGM Mirage. The buyers will be offered other available condos in the project and, if they aren’t interested, will get their deposits back.

All other components of Citycenter remain on schedule for a December 2009 grand opening, according to MGM Mirage. Rising on 67 acres between the Bellagio and Monte Carlo resorts, the massive endeavor has been under construction since 2006. All told, the development now includes approximately 7,200 hotel and condominium units in multiple high-rise towers plus the Crystals, a 500,000-square-foot retail and entertainment district, a resident Cirque du Soleil show celebrating the legacy of Elvis Presley, and its own monorail to move people between MGM’s three neighboring resorts.

The development’s centerpiece is the 61-story Aria Resort & Casino, which will have 4,000 hotel rooms and 150,000-square-feet of gaming area as well as multiple dining and entertainment venues. The Mandarin Oriental Hotel & Residences will feature 400 hotel rooms below 227 residential units and will be managed by the Mandarin Oriental Hotel Group. Veer Towers will contain 670 residential units in two towers. Vdara will contain 1,495 hotel-condominium units. The Crystals retail and entertainment complex have approximately 76 outlets featuring high-end fashion, boutiques, dining and entertainment venues.

Prior to the cutbacks, the actual gross cost of Citycenter was $11.2 billion. In its first quarter report, MGM Mirage pegged the net project budget at $8.5 million–after an expected $2.7 billion in residential sales, of which about 65% has been realized. The gross project budget included $9.2 billion for construction costs (not including capitalized interest), $1.7 billion for the land, $200 million for pre-opening expenses and $100 million of “intangible assets.” As of August, approximately 54% or 1,421 of the 2,700 condominiums have been sold for $1.75 billion.

Citycenter is one of two major redevelopment projects that will transform the area around Las Vegas Boulevard and Flamingo Road. Rising on a small lot between the Bellagio and Citycenter is the $2-billion Cosmopolitan Resort & Casino, which will include 3,000 hotel and condominium units, a 75,000-sf casino, 300,000 square feet of retail, an 1,800-seat theater, 150,000 square feet of meeting space, multiple night clubs, a five-acre “beach club” and a 3,800-space underground parking garage. The four-million-square-foot development went vertical in April 2008 and was scheduled to open in September 2009 but was delayed to mid-to-late 2010 due to a loan default by the original developer, Ian Bruce Eichner. Deutsche Bank, initially the lender on the project, is now the owner. Approximately 1,800 units of the units are said to be under contract.

Citycenter and Cosmopolitan are two among several major projects on and around the Las Vegas Strip that are either being delayed or have been canceled altogether as companies try to maintain liquidity during the credit crisis and the ensuing economic downturn. In August, citing poor capital markets and economic conditions, Boyd Gaming announced it would halt work on Echelon, its $4-billion megaresort on the Las Vegas Strip.

Under construction for a year and scheduled to open in late 2010, all work on the 87-acre, 5,000-room development immediately south of Circus Circus on the Las Vegas Strip has been delayed indefinitely. The property is slated to hold five hotels, 750,000 sf of convention and meeting space, 300,000 sf of retail, two live entertainment venues, 30 dining and nightlife venues, a 140,000-sf casino and parking for 8,000 cars.

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