NEW YORK -(Dow Jones)- MGM Mirage (MGM) is exploring options for 85 acres of prime real estate in Atlantic City, N.J., that the casino operator has left vacant since it acquired the land seven years ago.
The company is mulling a development similar to its sprawling $7.4 billion CityCenter project under construction on the Las Vegas strip. It will feature condos, boutique hotels, a resort casino, and a retail and entertainment district.
"We have no doubt that the type of development should be a mixed-use development along the lines of CityCenter, although at a smaller scale," said Dan D'Arrigo, senior vice president of finance at MGM Mirage, in an interview.
MGM Mirage owns 71 acres of unused land tucked between the Las Vegas-style Borgata hotel and casino - a joint venture between the company and Boyd Gaming Corp. (BYD) - and Harrah's Atlantic City. In addition, it has 14 acres of waterfront property behind the Trump Marina Hotel Casino. That land was acquired as part of the company's purchase of Mirage Resorts Inc. in 2000.
D'Arrigo said the main question before the company is whether to pursue a joint venture or a solo project.
MGM Mirage, which owns at least a third of the Las Vegas strip, has long teased the market with development plans for the Atlantic City properties.
"It almost seems as though they find something else better to occupy their time and money. But I think they will be here with their own facility at some point," said Joseph Weinert, senior vice president at Atlantic City-based Spectrum Gaming, a consultant.
Land sells for $15 million an acre in Atlantic City, and so MGM Mirage could fetch a fortune if it just sold its land.
D'Arrigo acknowledged that MGM Mirage has been slow to develop the land as the company concentrated on other ventures. "We've been flirting with going to Atlantic City for quite some time and, frankly, we've disappointed people by slowing down in the past and we don't want to disappoint anybody in the future," he said, adding that he expects a project in the next five years.
The Atlantic City gambling industry has been hampered by stiff competition from new gaming markets in Pennsylvania and New York and a recent partial ban on smoking. But casino operators remain optimistic about the island town's prospects as they try to reinvent Atlantic City as a Las Vegas of the East.
"The market itself is fine. It needs to stop whining about what's going on all around it and needs to collectively improve itself, and it is," said D'Arrigo, noting Pinnacle Entertainment Inc.'s (PNK) $1.5 billion development project on the former site of the Sands Hotel & Casino.
"And we will over time put a lot money there as well," he said.
Shares of MGM traded recently at $85.49, down 27 cents.
-By Angela Pruitt
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