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LAS VEGAS-In the final throws of opening its massive CityCenter development on the Las Vegas Strip; MGM Mirage today reported a $750.4 million–$1.70 per share–loss in the third quarter on net revenue of $1.53 billion. That compares to a profit of $61.3 million–$0.22 per share–on net revenue of $1.78 billion in the same year-earlier period. The company owns 16 gaming properties, most of them on the Las Vegas Strip.

The big reason for the loss was the previously announced charge against earnings to account for the drop in value of the assets in the CityCenter development due to the recession. CityCenter is a 50-50 joint venture of MGM Mirage and Dubai World.

Last month, the company said it would be taking a $1.15-billion non-cash impairment charge in the third quarter related to its 50% portion of the lost value–$955 million related to its investment in CityCenter and $174 million related to the sales value of the condominiums. On Thursday, it reported a slightly higher a charge of $1.17 million–$956 million on the overall investment and $203 million for lost condominium value.

On the Las Vegas Strip, where it owns nine casino resorts not including CityCenter’s Aria, MGM Mirage posted an overall average occupancy of 95%, which is equal to last year, however; it accomplished the feat with steeply discounted room rates relative to the year-earlier period–despite the increasing rates throughout 2009–and a breakdown by resort shows most of them losing occupancy compared to the same year-earlier period.

Overall room revenue from the Strip decreased 21% to $1.22 billion from $1.45 billion in the same year-earlier period. The average daily room rate and revenue per available room each fell by 23%, with ADR falling to $105 from $136 and RevPAR falling to $100 from $129.

The year-over-year results mask what chairman/chief executive Jim Murren told analysts was an otherwise “monumental” quarter for MGM Mirage. “From an operating perspective, we saw net profit [excluding impairment charges] improve, we revised our credit facility to be more like our historical credit facilities, we have prepared CityCenter for the world…and we have delivered these results in the face of continuing economic challenges.”

Murren said two key performance positives for the quarter are that the company added market share in both conventions and hotels, and that it maintained a 95% occupancy on a YOY basis despite increasing its room rate throughout 2009 relative to the overall market. In addition, he says that while its premier Strip asset, Bellagio, saw a 21% YOY decline in RevPAR its competitive set experienced a YOY RevPAR decline of closer to 30%. Finally, he said the company confirmed 550,000 convention room nights during the third quarter, which is very similar to its performance prior to the recession.The company’s resorts on the Strip include Mandalay Bay, Luxor, Excalibur, New York-New York, Monte Carlo, Bellagio, Mirage, Circus Circus and MGM Grand. Five of the company’s nine Strip casinos saw occupancy decline compared to the third quarter of 2008 while four others saw increases in occupancy, according to the company’s supplemental financial statement for the third quarter. All showed significant declines in ADR and RevPAR when compared to the year-earlier period.

Luxor showed the largest year-over-year decline, with occupancy falling 270 basis points to 94.4% in the third quarter of 2009 from 97.1% in the same year-earlier period on a 25% decline in the resort’s ADR to $147 from $196. Other YOY occupancy losers were Mandalay Bay (-180 bps), Mirage (-120 bps), Bellagio (-70 bps) and MGM Grand (-10 bps).

The largest gainer was Excalibur, where average occupancy increased 530 basis points to 95% from 89.7% in the same year-earlier period on a 27% decline in ADR to $43 from $59. Other occupancy gainers were New York New York (+110 bps), Circus Circus (+30 bps) and Monte Carlo (+10 bps).

MGM Mirage’s quarterly report doesn’t break out gaming revenue for the Strip. Overall, the company gaming revenue declined 1% despite improved performance in other markets. The company is not alone. Competitors Harrah’s Entertainment Inc., Las Vegas Sands Corp. and Wynn Resorts Ltd. all reported YOY weakness in gambling revenue, as well as hotel occupancy and room rates.

As of the end of the third quarter, MGM Mirage had approximately $4.3 billion of borrowings outstanding under its senior credit facility, available borrowings of $1.4 billion, and $12.5 billion of total debt. The Company’s cash balance was $897 million at September 30, 2009, higher than normal due to net proceeds of approximately $451 million from its September issuance of $475 million 11.375% senior unsecured notes due 2018. The company used the proceeds in October to pay down the senior credit facility, including a permanent reduction in the facility of $226 million.

Looking ahead hopefully, and countering critics who fear CityCenter will take from MGM’s other Strip resorts, MGM chairman/chief executive Jim Murren said he expects CityCenter to grow the company’s business significantly after it opens next month. Vdara, the 1,500 unit ‘condotel’ tower, is opening on December 1, followed by the 500,000-square-foot Crystals retail center on December 3, the 400-room, 227-home Mandarin Oriental hotel and condo tower on December 4, and the 4,000-room Aria Resort and Casino on December 16.

Two weeks ago, when MGM estimated its third-quarter write-off of CityCenter’s value, it said it 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. For that story, click here .

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