Wall Street analysts predict MGM may sell The Mirage

Two Wall Street analysts said in research notes Wednesday that MGM Resorts International may be considering selling The Mirage to focus on other development aspects for the Strip casino giant.

The reports said MGM Resorts could sell the hotel-casino to Starwood Capital for between $1 billion and $1.5 billion.

A spokesman for Starwood, which sold the Riviera Hotel and Casino to the Las Vegas Convention and Visitors Authority in February for $182.5 million, declined comment.

Wells Fargo Securities gaming analyst Cameron McKnight told investors a possible transaction "makes sense to us." He said MGM "has taken its international marketing team and players out of (The Mirage)."

Analysts said a sale of The Mirage was possible because MGM Resorts has focused most of its recent attention and development dollars on the Strip's southern end, where it is building the Park project between the New York-New York Hotel & Casino and Monte Carlo Resort and Casino, a $350 million sports arena, and is expanding the Mandalay Bay convention complex. The company is expected to change the name of Monte Carlo and is also exploring other nongaming attractions at its south Strip properties.

MGM is also spending billions of dollars on building new hotel-casinos in Maryland, Massachusetts and Macau.

"MGM has reprogrammed other assets recently in need of (capital expenditures) in the south end of the Strip, but hasn't done much with Mirage," McKnight said. "MGM has a heavy development pipeline so a sale could free up some resources."

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said "MGM appears to be in a position in which it is thinking about its real estate holdings more strategically."

The company acquired The Mirage, which was originally built by Steve Wynn, when it bought Mirage Resorts in 2000 for $6.4 billion. In 2009, MGM Resorts sold The Mirage's sister resort Treasure Island to Phil Ruffin for $755 million, leading to speculation the neighboring property would also be sold. At the time, MGM Resorts was having financial issues as it sought to complete the CityCenter complex.

In addition to The Mirage, MGM Resorts also owns the Circus Circus Hotel Casino on the Strip's north end.

"The Mirage now sits more isolated away from other MGM properties," Wieczynski said. "This has probably affected business levels as MGM's M Life rewards program has grown over the last three years."

In an e-mail Wednesday, MGM spokesman Clark Dumont said, "We do not comment on rumor and speculation based on 'multiple sources' that are unnamed, and 'press reports' that do not exist, to my/our knowledge."

A possible sale of The Mirage was first reported early this week by the VitalVegas.com website, which cited "rumors."

Wieczynski said MGM "may have been presented with a very attractive offer from Starwood." The analyst said he saw construction activity at The Mirage in the spring to reduce high-end gaming space and add a center bar at the resort.

Wieczynski said a sale of The Mirage could could lead to the company selling other properties.

"MGM (is looking) to pursue strategies aimed to have the true market value of its assets more appropriately reflected in the company's trading multiple and to strategically raise capital in advance of scheduled new resort development openings," he said.