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LAS VEGAS-MGM Mirage said Tuesday believes the fair value of its 50% investment in the new CityCenter development on the Las Vegas Strip to be $2.44 billion. Double that for the total investment value and you get $4.88 billion. It was officially $2 billion higher earlier this year.

The revaluation was prompted by the company’s decision to discount the prices of its 2,400-unit residential inventory by 30%. “This decision and related market conditions led to the conclusion that the carrying value of the residential inventory is not recoverable,” MGM said in a statement.

CityCenter is a 50-50 joint venture of MGM Mirage and Dubai World. MGM said Tuesday it would take a $1.15-billion non-cash impairment charge in the third quarter related to its 50% portion of the lost value — $955 million for the commercial portion of the project and $174 million for the for-sale residential portion of the development.

Earlier this year the original total investment value was $8.7 billion. Back out $1.8 billion in debt, which was restructured and lowered from $2.5 billion in May, and there’s $6.9 billion of investment value for MGM Mirage and Dubai World. Due to the lower value of the real estate as estimated by several third party experts, MGM Mirage believes that investment value has fallen to $4.88 billion, or $2.44 billion each. As of June, MGM Mirage had invested $3.5 billion in the project.

Concurrent with the write-down announcement Tuesday, MGM majority shareholder Tracinda Corp. said it is “exploring the possibility of strategic partnerships or other alternatives with respect to its investment” in the company because it “believes there is substantial unrecognized value in MGM Mirage and CityCenter that is not reflected in the market value of [the] stock,” which is trading in the $12 range, down from $100 in late 2007 and up from just $2 in early 2009. Tracinda, led by billionaire Kirk Kerkorian, said it would not initiate any such transaction until after CityCenter is mostly up and running in December, and may ultimately do nothing at all.

Sales revenue from the planned 2,600 condos was initially expected to total $2.7 billion. Then a construction mistake killed plans for a couple of hundred condos that were planned above the Harmon Hotel–the only piece of the development that will not open this year as previously planned–and the recession has left a little less than half of the units unsold. Of some $1.6 billion in contracted condominium sales as of mid-year MGM Mirage sources told GlobeSt.com at the time that it expected to close on at least 75% of that total. Earlier this month, MGM Mirage offered buyers with units under contract a 30% price discount if they closed on the purchase of their units.

CityCenter includes 6,400 hotel, condo and condo-hotel rooms in several high-rise towers designed by famous architects. The development has been under construction since 2005. The project is on track to open in stages between October 1 and December 16, when the 4,000-room Aria hotel-casino is scheduled to open. The 500,000-square-foot Crystals retail component will be between 65% and 70% booked by the time it opens on December 3, the company told GlobeSt.com in July. MGM Mirage has been expecting retailers to generate sales of approximately $1,300 per square foot, with MGM Mirage retaining approximately 10% of the total.

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