The Next Project to Stall Could Be Massive CityCenter

By Tony Illia

Will the deepening recession and skittish lending environment find their next victim in CityCenter? The Las Vegas development faces mounting challenges in reaching completion.

The project, touted as the nation's largest privately funded development, has been trying unsuccessfully for months to secure a $1.2-billion loan needed to finance the final leg of construction. Majority Leader Sen. Harry Reid (D-Nev.) and Sen. John Ensign (R-Nev.) have reportedly made calls to banks on the project's behalf.

The $9.2-billion resort complex was scheduled to open in December.

On Mar. 23, however, developer MGM Mirage was slapped with a lawsuit by project partner Dubai World, a conglomerate owned by the Dubai government, who wants out of the deal. The timing couldn't be worse. MGM Mirage is cash-strapped and struggling under a $13-billion debt load. On Mar. 17, the gaming giant reported a $1.15-billion fourth quarter loss amid a 17% drop in gaming receipts and 21% room occupancy decline. It additionally has $1.2 billion in bond payments due later this year as well as $650 million in interest payments.

Dubai World's lawsuit filed in Delaware Chancery Court signals that it probably won't make a $100-million progress payment on CityCenter due Mar. 27. Failure to do so could imperil the project and result in work stoppage by general contractor, Perini Building Co., a unit of Perini Corp., Framingham, Mass.

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