Tuesday, August 04, 2015

MGM Weighs Real Estate Options

MGM Resorts International reported second quarter 2015 earnings results earlier today. The theme this earnings season has been stronger Las Vegas trends offset by a softer Macau. Revenue at MGM's wholly owned domestic resorts was 1.7 billion, an increase of 4% compared to the prior year quarter. Average daily room rate and revenue per available room both increased more than 6%. MGM China revenue decreased by 33%.

During the company's earnings conference all Jim Murren hinted at the possibility of a REIT conversion. He said the company has been weighing all options when it comes to real estate and a definitive decision would be announced by the end of the year.

As for the rumors that The Mirage was being sold - Murren said "The Mirage is not on the market." Some people are seeing this as a sign that The Mirage is definitely not being sold. Others think that Murren chose his words carefully, and the property isn't on the market because it has already been sold. With MGM looking at all real estate possibilities I wouldn't be surprised at either outcome.

Murren also talked about how The Harmon is almost completely dismantled now, and MGM is trying to decide what to do with that two acre property. The leading candidate seems to be an expansion of The Shops at Crystals. I wouldn't be a huge fan of that plan, but Crystals seems to be doing quite well so it probably makes sense financially.