Abu Dhabi, MGM plan $3bn non-gaming resort

Having just acquired a 7.5 percent stake in alternatives giant The Carlyle Group, the Abu Dhabi government fund Mubadala is again looking to make waves with a $3bn MGM Mirage resort in the city, the first of several such projects.

Mubadala Development Company, the Abu Dhabi Government strategic investment and development company, is partnering with MGM Mirage to develop luxury non-gaming hotels and resorts worldwide, initially targeting developments in Abu Dhabi and Las Vegas.

First up is an “iconic” MGM Grand Abu Dhabi resort with an estimated development cost of $3 billion. The resort, to be built on the downtown waterfront of Abu Dhabi island, is expected to open in 2012, according to a press release. The project will be wholly owned by Mubadala.

MGM will provide management and development services for the joint venture. The hotel and gaming company currently owns and operates 17 properties in Nevada, Mississippi and Michigan with investments in three other properties in Nevada, New Jersey and Illinois. It also has new developments under construction in Nevada, Michigan and Macau.
“The hospitality sector is an important evolution in our portfolio of strategic interests,” Mubadala chief executive Khaldoon, Al Mubarak, said in a statement announcing the partnership. “As with every sector in which we work, our aim is to identify the right partner with the right performance track record, strategic outlook and execution capabilities. MGM MIRAGE's record speaks for itself. We are excited by the potential opportunities that the relationship between our two organisations can create.”

Terry Lanni, chairman and chief executive of MGM Mirage, described the deal as “the first of many successful ventures with our Mubadala partners.”

MGM Mirage has also structured a deal with the Diaoyutai State Guesthouse in Beijing to build non-gaming properties in the People's Republic of China.

Abu Dhabi’s Mubadala most recently captured headlines when, in September, it acquired a 7.5 percent stake in The Carlyle Group for $1.35 billion in cash and also committed $500 million to an investment fund managed by the buyout firm.

Abu Dhabi is in the midst of an upscale development binge. The emirate recently announced plans to build both a Louvre and Guggenheim museum in an effort to make Abu Dhabi a cultural rival to nearby Dubai’s financial prominence.

Investment funds affiliated with governments, like Mubadala, the Abu Dhabi Investment Authority and Singapore’s GIC, have been playing prominent roles in global alternative investments as cash from the sale of oil and foreign currency reserves has been put to work.