LAS VEGAS, May 21 /PRNewswire-FirstCall/ -- Aligning itself with one of the most diversified and well-resourced operators in the retail industry, Boyd Gaming Corporation (NYSE: BYD) today announced a joint venture agreement with General Growth Properties, Inc. (NYSE: GGP) to develop a 300,000-square-foot retail promenade as part of Echelon, the Company's 87-acre resort masterplan development on the Las Vegas Strip.
"We are delighted to welcome one of the most respected names in retail to Echelon," said Bob Boughner, President and Chief Executive Officer of Boyd Gaming's Echelon Resorts. "With General Growth, we have jointly envisioned a unique retail experience at Echelon with a diversity of upscale boutiques, cafes, restaurants, and shops. General Growth's operating experience, vast resources and extensive tenant relationships will be critical to delivering this important anchor within our resort masterplan."
John Bucksbaum, Chief Executive Officer of General Growth, said, "Of all the world's most-visited places, Las Vegas has some of the highest standards when it comes to customer expectations for wonderful shopping and entertainment. We welcome this newest opportunity to far exceed those expectations."
Under terms of the agreement, Boyd Gaming will contribute the above-ground (air rights) real estate interest necessary to develop the promenade, and General Growth will contribute $100 million, creating the 50/50 joint venture. The joint venture will then develop the retail promenade. The retail project is expected to cost approximately $500 million, including the value contributed by both parties.
General Growth has a portfolio of more than 200 shopping centers in 45 states. Four of their retail centers are in Las Vegas, including Fashion Show and The Grand Canal Shoppes at the Venetian. GGP will soon acquire the Shoppes at the Palazzo, also at the Venetian, opening in early 2008. In 2009, it will open Summerlin Centre, a mixed-use development featuring 1.2 million square feet of retail in the Summerlin master-planned community on the west rim of the Las Vegas Valley.
General Growth is the latest addition to an assemblage of leading international operators and iconic brands that Boyd Gaming has brought together to develop Echelon, including Morgans Hotel Group, who is developing the Delano and Mondrian hotels in a joint venture with Boyd Gaming; Shangri-La Hotels, the leading luxury hotel brand in Asia; and entertainment producer AEG Live.
Spanning 87 acres on the Las Vegas Strip, Echelon will feature 5,000 hotel rooms, 750,000 square feet of convention and meetings space, two live entertainment venues, 30 dining and nightlife venues, and a 140,000-square- foot casino, all within a lushly landscaped resort setting. Echelon is expected to open in the third quarter 2010.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding the future, including but not limited to statements regarding the Company's joint venture with General Growth Properties, Inc., the proposed retail promenade at Echelon and its associated anticipated cost and General Growth's anticipated acquisitions and openings. In addition, forward-looking statements include statements regarding Las Vegas' standards and expectations, and the Company's expectations regarding the retail promenade and Echelon, including anticipated timing, amenities and costs for each. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. In particular, the Company can provide no assurances regarding the estimated timing, cost, progress or anticipated amenities and features of Echelon or the retail promenade. Among the factors that could cause actual results to differ materially are the following: competition, litigation, changes in laws and regulations, including increased taxes, the availability and price of energy, economic, credit and capital market conditions and the effects of war, terrorist or similar activity. In addition, the Company's development projects, including Echelon and the retail promenade, are subject to the many risks inherent in the construction of a new enterprise, including unanticipated design, construction, regulatory, environmental and operating problems and lack of demand for the Company's projects, as well as unanticipated delays and cost increases, shortages of materials, shortages of skilled labor or work stoppages, unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems, weather interference, floods, fires or other casualty losses. In addition, the Company's anticipated costs and construction periods for projects are based upon budgets, conceptual design documents and construction schedule estimates prepared by the Company in consultation with its architects and contractors. Many of these costs are estimated at inception of the project and can change over time as the project is built to completion. The cost of any project may vary significantly from initial budget expectations, and the Company may have a limited amount of capital resources to fund cost overruns. If the Company cannot finance cost overruns on a timely basis, the completion of one or more projects may be delayed until adequate funding is available. The Company cannot assure you that any project will be completed, if at all, on time or within established budgets, or that any project will result in increased earnings to the Company. Significant delays, cost overruns, or failures of the Company's projects to achieve market acceptance could have a material adverse effect on the Company's business, financial condition and results of operations. Furthermore, the Company's projects may not help it compete with new or increased competition in its markets. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's Form 10-K for the year ended December 31, 2006, which is on file with the SEC, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.
The Commerce Department reported that sales of new single-family homes jumped by 16.2 percent in April to seasonally adjusted annual rate of 981,000 units. That was far better than the tiny 0.2 percent gain that economists had been expecting.
However, the median price of a new home sold last month fell to $229,100, a record 11.1 percent decline from the previous month. The big price decline indicated that builders are slashing prices in an effort to move a huge overhang of unsold homes.
The jump in sales was the biggest increase since a 16.4 percent surge in new home sales that occurred in April 1993.
However, analysts cautioned against reading too much into the big gain, especially in light of other surveys showing that builder confidence has sunk in recent months over worries that troubles in the subprime mortgage market will further crimp demand in coming months.
There was also concern because all of the strength in sales came in one region of the country, the Northeast, which saw a surge of 43.1 percent.
Sales were down 28.1 percent in the Midwest and 25.4 percent in the West. Sales fell a smaller 3.4 percent in the South.
The drop in median prices in April compared to March was a record one-month decline. If the April sales price was compared to the sales price a year ago, the decline was 10.9 percent, the biggest year-over-year drop since 1970.
In other economic news, the Commerce Department said that orders to U.S. factories for big-ticket manufactured goods posted a moderate 0.6 percent increase in April, helped by a continued rebound in business investment.
In a third report, the Labor Department said that the number of newly laid off workers filing applications for unemployment benefits rose to 311,000 last week, an increase of 15,000. But even with the gain, claims remain at a level indicating a healthy labor market.
While the increase in orders for durable goods was less than had been expected, the government sharply revised the March performance to show a 5 percent surge, much stronger than the 3.7 percent gain previously reported.
Analysts believe that U.S. factories, which have been buffeted by the weakness in housing and slumping demand for autos, are starting to stage a moderate rebound, helped by reviving interest on the part of businesses to spend money to expand and modernize.
The overall economy slowed in the first three months of this year to an annual growth rate of just 1.3 percent, the weakest performance in four years, as a steep slump in housing continued to weigh on the economy's performance.
Analysts are hoping that spending by consumers and businesses will be able to overcome the weakness in housing and keep the country out of a recession.
The report on durable goods offered encouragement in the area of business investment. It showed that demand for capital goods excluding airplanes, considered a good proxy for business investment, rose by 1.2 percent in April following, the second solid monthly increase.
The 0.6 percent rise in total durable goods orders came even though demand for transportation products fell by 1.3 percent. This reflected a drop of 10.7 percent in demand for commercial aircraft and a 1.9 percent fall in orders for motor vehicles.
Excluding transportation, orders would have been up by 1.5 percent, the same performance as in March.
There was strength in orders for primary metals such as steel which rose by 4.3 percent and orders for electronic equipment and appliances, which rose by 3.8 percent.
But demand was weak for computers, which fell by 7.8 percent, and communications equipment, which dropped 5 percent.
This may be the best time in history to buy a home in Las Vegas.April's housing data for Las Vegas, as expected, was a continuation of thehousing bottom we have been scraping along for nearly six months. But, for thefirst time, there appeared to be some minute improvements worth noting.Despite the negativity of national reports - particularly Fiserv LendingSolutions which has predicted that Las Vegas will be the worst market in the USfor housing appreciation this year - pricing in the market remained very stable. ----->In fact, prices for existing homes remained above last year's levels andwere an improvement on March's median ($284,900 median).----->And despite very weak sales, the new home sector also maintained relativeprice stability ($323,990 median).Another improvement in the market appeared to be the increase in New HomePermits, a continuation of the trend reversal that began last month. But, thisinformation must be tempered by the knowledge that laws regarding how permitsare obtained are in the process of review and change. Builders may bestockpiling in advance of a change in the law.Nonetheless, the long drought on new home permits may impact the marketsignificantly. In April, we saw a net loss of four new home communities. Whenyou consider that there are 545 active new home subdivisions in the Las Vegasmarket - the highest per capita in the known universe - that doesn't seem likemuch. ----->But, now, combine these three facts: (1) March boasted the highest number of new home subdivisions in LasVegas history. (2) The number of new home subdivisions had been growing steadily since2005. (3) New home permits are off 48.2% for the year. Somehow, that very slight decline in the number of new home subdivisionsassumes slightly greater importance. It is possible that we are seeing thefirst downturn in new home inventory. However, the same cannot be said for theresale market, which is at a record high 24,038 units. Until there is adownturn in new home inventory, resale--the number of active new homecommunities--existing home inventory will remain relatively high.Still another improvement in the market is relative stability in sales numbers. While it is true that both new and existing home sales were well below lastyear's levels (40.2% and 30.3% respectively), both segments of the traditionalmarket were at similar sales level as the previous month. Other analysts havepointed to the lack of the usual seasonal sales uptick in the month of April andhave called these sales results "dismal."Of course, they are correct in that assessment. The 1,548 new home sales and2,489 existing home sales are dismal for April. But, the fact that we haven'tslipped lower is one more sign that we may be on a real rather than a falsebottom. ----->We are not suggesting that a rebound is around the corner. What we thinkthese statistics suggest is that we may have begun the long, laborious processof returning to normalcy.April's statistics underscored another important point: Vertical construction isbecoming more and more powerful as an element in the housing market. Based onthe statistics in Fast Facts and our own research, the number of Vertical unitsclosed in 2007 will easily be 30-50% more than last year. We will certainly see5,000 closings of Vertical product this year.You can look at the glass half empty or you can look at the glass half full. The way we see it, right now the Las Vegas real estate industry needs a drink!Respectfully submitted,
Larry Murphy Steve BottfeldSalesTraq Marketing Solutions
LAS VEGAS (AP) - Tracinda Corp., the investment arm of billionaire investor Kirk Kerkorian, said Monday that it plans to enter into negotiations with MGM Mirage Inc. to buy its Bellagio Hotel and Casino and CityCenter properties.
Shares of MGM Mirage jumped 16 percent in after-hours trading.
Tracinda also said in a filing with the Securities and Exchange Commission that it wants to pursue "strategic alternatives" related to its 56 percent stake in MGM Mirage.
Those alternatives may include a financial restructuring involving all or a significant part of the rest of the company, Tracinda said.
MGM shares jumped $10.30 to $73.25 in extended trading after closing up 15 cents to $62.95 in the regular session.
Bellagio is the jewel in the crown of MGM Mirage's Las Vegas Strip properties, accounting for roughly 20 percent of its operating profits, while CityCenter is its $7.4 billion megaresort being built next door and set to open in late 2009.
While Tracinda owns a majority stake in MGM Mirage and Kerkorian sits on the board of directors, his intention through the filing was to be as open as possible with shareholders and analysts, according to a person close to the matter who was not authorized to speak publicly and insisted on anonymity.
Analysts said the move was made to take advantage of the intense interest in Las Vegas from private equity firms looking for rising real estate values and properties with steady cash flow. It could also signal the piecemeal sale of the casino company that grew to become the world's second biggest through its acquisition of the Mandalay Resort Group in 2005.
Last week, New York property developer Elad Group said it would spend $1.2 billion acquiring a 34.5-acre site that now houses the cowboy-themed New Frontier hotel-casino, nearly doubling the recent per-acre price for land on the Strip. It said it would demolish the site and invest in total $5 billion on a multi-use casino and residential complex.
MGM Mirage's two high-end properties are now valued at about $10 billion, analysts said, roughly equivalent to the value of Tracinda's 158.8 million shares at the market's close. The offer is a sign Kerkorian believes they are worth more, they said.
"He's obviously seeking to monetize his investment in this company," said Susquehanna Financial Group analyst Robert LaFleur. "It's a public declaration by Tracinda that they think the stock's undervalued."
Deutsche Bank analyst Bill Lerner said the offer could make MGM Mirage a stronger company by taking key real estate off its books and allowing it to operate as a management company.
"The Bellagio has been the crown jewel of the portfolio. You wouldn't want to bifurcate that from the system," Lerner said. "This way, the company could be selling the real estate, maintaining management and getting paid more for the new structure in terms of valuation."
Besides MGM Mirage's several properties on the Strip such as Mandalay Bay, Luxor and New York-New York, it has a 50-50 stake in the Borgata in Atlantic City, N.J., and an equal amount in the $1.1 billion MGM Grand Macau set to open later this year. It also has properties or investments in Mississippi, Michigan and Illinois.
Last month, the company said it had assembled a 78-acre site further north of the Strip in conjunction with its Circus Circus property and was looking for third parties to help it develop a megaresort there. Observers said the market is ripe with interested investors.
"Everything's in play today," LaFleur said. "Debt is available in immense quantities at very cheap prices. The market is awash in liquidity and if the public market is not willing to value assets, the private market is ready to step in."
The move is Tracinda's second toward MGM Mirage in seven months. In November, Tracinda offered to buy 15 million shares at $55 each, offering a 12 percent premium to the previous day's closing price, but shares promptly shot above the mark and traded consistently higher, so the effort fizzled.
In Monday's filing, Tracinda noted that it may forgo negotiations regarding the remainder of the company, saying it "has made no decision with respect to any such restructuring transactions and reserves the right not to engage in or approve any transaction."
MGM Mirage's annual shareholders meeting is Tuesday. After the regular meeting, the board "will begin its review of Tracinda's filing and its implications for the company, and will respond in due course," the company said in a brief statement.
___
On the Net:
MGM Mirage Inc: http://www.mgmmirage.com
The growth in apartment rents is beginning to slow in the Las Vegas Valley as more and more residents move out of their complexes because they can no longer afford their leases, according to a tracking firm.
Apartment lessors requested average rents of $872 during the first quarter, a 4.3 percent increase over the $836 sought in the first quarter of 2006. That's a bit of a break for tenants because landlords were seeking a 6 percent increase a year ago, according to local research firm Applied Analysis.
The rising rents lowered occupancy to 94.1 percent in the first quarter. It stood at 95.4 percent during the fourth quarter.
Competition from condos and single-family homes, many with rental prices that have been attractive, have had an impact as well, said Applied Analysis Principal Brian Gordon.
"The escalation of prices has been challenging for some consumers to afford in certain portions of the valley," Gordon said. "They are moving to more affordable parts of the valley or out of the market in some cases."
The rental rate growth of 4.3 percent outpaces the rate of inflation, but it is better for consumers than the increase of 5 percent to 7 percent in recent years, Gordon said. He said rental growth should remain steady at 4 percent for several quarters.
Despite the drop in occupancy and slowdown in rent growth, the dynamics of the market will improve for apartment owners because of the large number of construction jobs and casino jobs being created in the next two to three years with development along the Strip, Gordon said.
In addition, many residents who lose their homes through foreclosures will also be moving into apartments, he said.
Among highlights of the report:
Housing report: National housing analyst John Burns said in his most recent report that the national housing market has softened much more than has been reported. Burns said national reports about existing and new home sales are misleading and that policy makers shouldn't rely on it. The Census Bureau calculation of new home data doesn't consider cancellations, which are running higher than normal.
"If you compare sales over the last 12 months to the prior 12 months, on a straight year-over-year comparison, the decline is much more," Burns said.
D.R. Horton and Lennar are reporting that orders have declined 27 percent to 33 percent. Both have dropped prices significantly in many markets to generate sales, Burns said.
"The Fed should know that the housing market correction has been quite steep and is also not showing signs of bottoming out," Burns said. "While the Fed has far more to consider than housing, they should know that the housing market could sure use some lower interest rates to help achieve stability soon."
"The question is will there be enough activity to fill the large volume of space coming on line," said Brad Peterson, a senior vice president for CB Richard Ellis. "Higher demand will have to continue for the market to stay healthy."
Rising construction prices and increased cost of land hasn't stagnated the red-hot office market, said CB Richard Ellis' Randy Broadhead.
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