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CityCenter raises stakes on the Vegas Strip

LAS VEGAS - CityCenter, the 67-acre glass-and-steel metropolis that debuts here next week, is being billed as the next great mega-casino resort.

LAS VEGAS - CityCenter, the 67-acre glass-and-steel metropolis that debuts here next week, is being billed as the next great mega-casino resort.

The $8.5 billion joint venture by MGM Mirage Inc. and Dubai World features the work of eight top architects and several luxury hotel and condo towers, a major retail complex, and, not least, a full casino.

It represents the next wave of uber-resort-casinos with everything under one roof. And it could be the last project of its scope to be built in Las Vegas for several years, analysts say, because of the credit squeeze, low demand, and an oversupply of hotel rooms.

"I don't think you can describe CityCenter as a casino," said Kevin DeSanctis, chief executive of Revel Entertainment Group L.L.C., which is developing the $2.5 billion Revel Casino in Atlantic City. "It's much broader than that."

Vegas is used to one-upmanship among developers, but CityCenter is its biggest bet yet - and its most expensive undertaking during a turbulent time for the gambling industry.

"We project visitation to increase 2 to 5 percent in 2010, driven largely by the opening of CityCenter," said Vince Alberta of the city's Convention and Visitors Authority.

Phased opening begins Tuesday with the first of four hotel towers, the Vdara Hotel & Spa, whose 1,495 suites double as residential condos.

On Dec. 3, the Crystals Retail & Entertainment District opens its glass doors; the next day, the Mandarin Oriental, Las Vegas hotel opens.

Then on Dec. 16, CityCenter's crown jewel debuts: the Aria Resort & Casino, with its 150,000-square-foot gaming floor.

CityCenter is the only major project seeing completion in Vegas this year. Others were put on hold because of financial problems, including the $4.5 billion Echelon resort being developed by Boyd Gaming Corp., which co-owns the Borgata Hotel, Casino & Spa in Atlantic City.

The $3.5 billion Cosmopolitan Resort & Casino was taken over by Deutsche Bank A.G. early last year, after its developer defaulted on more than $900 million in loans. The bank is trying to complete the project by mid-2010.

Another casino resort, the Fontainebleau, was about 70 percent complete when developers filed for Chapter 11 bankruptcy protection in June.

On Monday, billionaire investor Carl Icahn offered $105 million to buy the project from debtors, plus $51.5 million in funding to resume construction, which already has cost more than $2 billion. He outbid Penn National Gaming Inc. of Wyomissing, Pa., to open bidding at a bankruptcy auction Jan. 21.

Even gaming powerhouse MGM Mirage, which owns 10 casinos here, the most on the Strip, sought outside help to complete CityCenter.

In August 2007, MGM and Dubai World - an investment company that manages a portfolio of businesses and projects for the government of Dubai - announced a long-term strategic relationship. Dubai World would invest about $5 billion in MGM Mirage, including $2.7 billion for CityCenter.

When it is completed next year, CityCenter - tucked between the Bellagio and the Monte Carlo on the Strip - will employ 12,000 and add more than 5,800 hotel rooms.

Some experts predict the new supply, coming as Las Vegas already is heavily discounting rooms to boost occupancy, could hurt business at existing hotels and result in still-lower room rates.

In pre-recession 2001, Las Vegas had 125,000 hotel rooms to fill. By 2008's end, that number had swelled to 141,000. An additional 16,000 rooms are set to open in the next two years.

The industry calculates that every 1,000 new rooms require 200,000 new visitors per year to fill them.

"CityCenter will play a role in increasing market revenue; however, we anticipate 70 to 90 percent of its revenue will come at the expense of existing operators," said Las Vegas-based Jacob Oberman of the commercial real estate firm CB Richard Ellis Group Inc.

CityCenter's Atlantic City equivalent is the Revel Casino planned for the northern end of the Boardwalk. The project still needs about $1 billion in financing to complete, according to CEO DeSanctis.

"I would expect . . . to finalize all the work over the next several weeks, and we will go back out" to the lending markets, he said yesterday.

Three other Atlantic City casinos, including a $5 billion project proposed by MGM Mirage next to the Borgata, are on indefinite hold.

All interior work on Revel - including its high-end restaurants, nightclubs, and retail shops - came to a halt in late January, when lending dried up. Depending on when the final piece of financing is secured, DeSanctis said, Revel could open 16 to 20 months from the point crews begin work on the interiors.

"CityCenter is critical to the evolution of Las Vegas," DeSanctis said. "Hopefully, we will be critical to the evolution of Atlantic City, much the same way the Borgata was."

CityCenter by the Numbers

Cost to build: $8.5 billion.

Footprint on the Las Vegas Strip: 67 acres.

Number of hotels: Four - Aria Resort & Casino, 4,004 guest rooms; Vdara Hotel & Spa, 1,495 suites; Mandarin Oriental, Las Vegas, 392 rooms and suites; Harmon Hotel,

400 rooms.

Number of condo properties: Three - Veer, 670 units

in two towers; Mandarin Oriental, 227 units; Vdara, 1,495 units.

Size of Crystals Retail & Entertainment District:

500,000 square feet.

Size of Aria casino floor: 150,000 square feet.

Developers: MGM Mirage Inc. and Dubai World

SOURCE: MGM Mirage Inc.