MGM Resorts Loss Widens on Land Write-Offs; Vegas Improves

MGM Resorts International, the largest casino operator on the Las Vegas Strip, posted a wider fourth-quarter loss after writing off land holdings. Profit in Nevada rose and the Macau unit declared a $500 million dividend.

The net loss grew to $1.2 billion, or $2.50 a share, from $113.7 million, or 23 cents, a year earlier, Las Vegas-based MGM Resorts said in a statement today. Excluding land write-offs in Las Vegas and Atlantic City, the loss was 23 cents a share, matching the average of analysts’ estimates.

In Las Vegas, fourth-quarter earnings before interest, taxes, depreciation and amortization at MGM Resorts’ wholly-owned resorts grew 6.1 percent to $275 million, the company said. MGM China’s $176 million in profit was in line with estimates, according to Cameron McKnight of Wells Fargo Securities who has a market perform rating on the stock.

“We believe MGM’s strength in Las Vegas will be viewed favorably by the market today,” McKnight said in a note after results were announced.

MGM International fell 1.6 percent to $12.54 at the close in New York. MGM has added 7.7 percent this year as of yesterday, compared with 6 percent for the S&P 500 index.

MGM China’s $500 million special dividend will be paid to shareholders of record as of March 11 and distributed on or about March 18, according to the statement. MGM Resorts will receive $255 million, representing 51 percent.

MGM China

MGM China’s fourth-quarter revenue increased 1.7 percent to $731.2 million, the company said. Gambling revenue in Macau, the world’s largest casino market, climbed 14 percent to a record 304 billion patacas ($38 billion) last year.

In a conference call, MGM Chairman and Chief Executive Officer James Murren said the Chinese subsidiary should continue to pay dividends even as it begins construction next week on a $2.6 billion resort on the Cotai Strip.

Murren plans to invest in new shows and restaurants while cutting operating costs to boost profit at existing properties. He said MGM would look to build a few new casinos in markets where it could earn percentage returns in the high-teens, such as Maryland and Massachusetts.

The company isn’t pursuing casino acquisitions, Murren said, although he expects the market for those to continue.

“We had a company with significantly higher margins than we do today and we endeavor to get back to it,” Murren said. “We expect to show better profit growth than revenue growth.”

Land Write-Off

MGM recorded charges of $366 million related to land on the Las Vegas Strip and $167 million on property in Atlantic City. In both cases, the company abandoned plans to build multibillion-dollar resorts.

“In Las Vegas we built the CityCenter, a complex that opened in 2009 and that will probably be the last one you see for a while,” Murren said today on Bloomberg Television.

Murren said the company would consider selling the Crystals mall at CityCenter. MGM Resorts isn’t in negotiations to do so, he added.

“Instead of resorts, we build new nightclubs, entertainment complexes, improving our room product,” Murren said on Bloomberg Television. “We have found a return on investment for that capital is much higher than building a new resort.”

Fourth-quarter revenue was little changed $2.29 billion. Casino revenue advanced 1 percent in the quarter, compared with an 8 percent increase a year earlier.

Industrywide casino revenue on the Las Vegas Strip rose 2.3 percent to $6.2 billion last year, according to research by Bloomberg Industries.