Dubai World and MGM Mirage sold their joint retail project in Las Vegas for US$1.1 billion, as the UAE entity continues on its road to recovery from the 2009 financial crisis.
Invesco Real Estate and Simon Property Group will take control of CityCenter’s The Shops at Crystals, a 324,000 square feet luxury shopping centre, with the deal expected to close in the second quarter.
“We believe that Invesco Real Estate and Simon Property Group are the ideal stewards to maintain the high quality of the asset and usher in a new era of success,” said Jim Murren, the chairman and chief executive of MGM Resorts International.
The marriage of Invesco and Simon is a boost for the venture as both have much experience in this sector. Invesco Real Estate is a part of Invesco Group, a global investment firm managing assets worth $737.5bn at the end of February.
Simon Property Group brings the mall management side to the table, having owned or at least held an interest in 231 retail real estate properties in North America, Europe and Asia.
Chairman and chief executive David Simon said the acquisition was a step closer for the group to gain more leverage in the Las Vegas market.
“The acquisition of The Shops at Crystals provides us with an extraordinary opportunity to obtain a high-quality asset in a growing marketplace,” he said.
Dubai World declined to comment on the transaction.
The Shops at Crystals is part of the giant $8.5bn CityCenter project, a 27-hectare property with residential, hotel and entertainment offerings, which opened on the Las Vegas Strip in 2009.
Dubai World and MGM first signed an agreement in 2007 to create CityCenter. At the time, the venture was valued at $5.4bn, with Dubai World contributing about $2.96bn for 50 per cent of the equity, according to a release from MGM.
However, the development almost became a casualty of the financial crisis more than seven years ago.
In March 2009, Dubai World filed a lawsuit against MGM as an order of protection after the US gaming hotelier admitted in a securities exchange commission filing that it had “substantial doubt” about its ability to continue with the project.
Dubai World said at the time that essentially it was being asked to pay significantly more while getting less and with only uncertainty from MGM.
Later that year units began opening at the shopping centre.
Then it was Dubai World’s turn to fight financial woes as it requested a “standstill” on debt payments in late November 2009.
The entity reached a deal with creditors to repay some debts ahead of maturity in exchange for delayed repayment terms on other debts.
Dubai World announced it had come to an agreement to restructure $14.6bn of its debt last year.
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