美高梅國際酒店集團 (MGM) 2013 Q1 法說會逐字稿

Good morning and welcome to the MGM Resorts International first quarter 2013 earnings conference call.

Joining the call from the Company today are Jim Murren, Chairman and Chief Executive Officer; Bobby Baldwin, Chief Design and Construction Officer of MGM Resorts International and President and CEO of CityCenter; Corey Sanders, Chief Operating Officer; Dan D'Arrigo, Executive Vice President, Chief Financial Officer and Treasurer, Grant Bowie, Chief Executive Officer of MGM China Holdings Limited.

Participants are in listen only mode.

After the company's remarks there will be a question and answer session.

Now I would like to turn the call over to Mr. Dan D'Arrigo.

Thank you, McKenzie.

Good morning everyone and welcome to our first quarter earnings call.

Before we get started just a few disclaimers.

The call is being broadcast live on the internet at www.MGMresorts.com and a replay of the call will be made available on our website.

We furnished our press release on Form 8-K to the SEC this morning as well.

Before getting started on this call we will make forward-looking statements under the Safe Harbor Provisions of the Federal Securities Laws.

Actual results might differ materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in today's press release and in our periodic filings with the SEC including our most recent Form 10-K.

During the call we will also discuss non-GAAP financial measures in talking about the Company's performance.

You can find the reconciliation of these measures, the GAAP financial measures in our press release which is available on our website.

Finally please note that this presentation is being recorded.

With that I'll turn it over to Jim.

Thank you Dan and good morning everyone.

We are pleased to report our results today.

This is the best first quarter we've had in five years.

We've made broad sweeping progress on many fronts.

Our marketing efforts are paying off.

We are growing revenues, increasing our share in building loyalty.

Our capital investments and room remodels entertainment and FMB are generating attractive returns.

We have of course strengthened our technology systems and have improved practices leading to the greater efficiency that you see.

During the first quarter MGM reported net revenues up 3%, property cash flows grew 20% -- demonstrating the operating leverage in our business.

We're also very pleased to report record results from City Center, nearly tripling its profit.

We also had record results at MGM China.

Our wholly owned domestic results were driven by Las Vegas where EBITDA grew 18% year-over-year.

Visitation remains strong and macro trends are improving here helping to drive the recovery.

Growth in Las Vegas was somewhat offset by our regional properties which faced difficult comparisons as well as some of the early headwinds that have been well previewed in the market place.

That being said MGM Detroit and Beau Rivage remain market share leaders and we are finding success in cross marketing our Las Vegas properties to our regional customers.

It appears to us that Las Vegas, the market hit hardest by recession is nicely recovering and that its performance will likely outstrip the regional markets for the foreseeable future.

We continue to be hard at work to build the future of our business through development opportunities as there are key strategic investments that we see as attractive.

Since our last earnings call we have broken ground on MGM Cotai.

Our site work is advancing at an accelerated pace and we continue to be on track for a first half of 2016 opening date.

In Maryland we have been preparing our RFP for Prince George's county which we will submit by the end of next week.

We look forward to that progress and process in sharing more details on this exciting project to you in the future.

In Massachusetts we are honored by Mayor Sarno's confidence in selecting MGM to bring a world class urban resort to Springfield.

This is an important milestone in the process as the project now seeks city council approval after which a referendum is possible as early as July and then, ultimately, we will compete at the state level for the Western Region license.

In Toronto we and our partner Cadillac Fairview believe in our vision for an integrated resort in Toronto and we continue to work towards that development opportunity.

Back here in Las Vegas we recently announced plans to dramatically enhance the experience and offerings with an outdoor retail and restaurant park at two of our iconic resorts, Monte Carlo and New York, New York.

Hershey's, SBE and Shake Shack are already signed up to be anchored tenants in this project.

We expect to be announcing further details about these projects very, very soon.

We plan on integrating this outdoor park with our recently announced plans for a new world class arena in partnership with AEG.

This new 20,000 seat arena will be situated behind Monte Carlo in New York, New York and is planned to open in 2016.

Our goal for the arena is to drive additional large events to Las Vegas which further increases visitation and spend at our properties.

I am pleased with our results for the first quarter and believe that we are well positioned for 2013.

This is the beginning of a new era for MGM resorts.

With that I'd like to turn it over to Dan D'Arrigo to talk about our operating results.

Thank you Jim.

Our strong first quarter results were led by increased margins at our wholly owned domestic resorts which increased by over 250 basis points year-over-year driven by 335 basis point increase at our Las Vegas Strip property.

EBITDA on the Strip was driven by our luxury properties which had a combined increase of 27% year-over-year compared to a decrease of 1% at our non-luxury Strip properties.

Our luxury properties continue to lead the way in the market driven by increased convention room nights and the continued success on the high end casino business.

In our casino business, we are seeing the benefits of all the strategic initiatives we put in place throughout last year.

Organizational changes were made to streamline international and national marketed teams to better service our customers and drive profitability.

This was reflected in the first quarter as our Strip properties, including ARIA had record quarter in both international table games volume and win.

M life has been focused on continuing to enhance the customer experience and driving regional play to the Strip.

The more we learn about our customers, the more effective we are at marketing the right programs to them.

Our baccarat -- non-baccarat table game win on the Strip including ARIA increased by 24% and slot revenues grew by 4%.

Room revenues in ADRs increased by about 2% in the quarter.

While occupancy was down slightly occupied room nights increased by 1% at our Strip properties as the remodeled rooms at the MGM Grand are now online.

Recall that for the first three quarters 2012 we had approximately 70,000 room nights offline per quarter at the MGM Grand due to the room remodel program.

We are seeing strong returns on our room remodel investment as evidenced by Bellagio and MGM Grand where we are able to maintain high occupancy levels and drive increased room rates.

Our convention mix increased slightly despite city wide convention attendees being down.

Looking forward at the second quarter we expect its strong convention calendar, which will drive RevPAR, to be up approximately 2% year-over-year.

Shifting over to the balance sheet and to help you with some of your modeling, on April 1, we repaid $462 million in outstanding principal amount of senior notes at their maturity and excluding MGM China and pro forma for this pay down we currently have approximately $1.2 billion in available liquidity including our excess cash and capacity under our revolver.

Excluding MGM China, our current debt level is approximately $12.6 billion.

At the end of the first quarter, MGM China had cash of approximately $565 million, debt of roughly $553 million, and an adjusted leverage ratio of less than 1 based on their trailing 12-month EBITDA.

MGM China in March paid a $500 million dividend of which, $255 million was retained by MGM resorts and $245 million was distributed to all other shareholders.

MGM China also put in place a regular dividend distribution policy for up to 35% of its annual profits to be paid semi-annually.

The Board will also consider, going forward, special dividends from time to time.

CityCenter has approximately $1.85 billion in outstanding senior notes and excess cash of approximately $240 million.

In addition, CityCenter has approximately $200 million in cash from condo proceeds which includes the recent receipt of approximately $40 million in net proceeds from the sale of our mortgage loan notes which occurred here in April.

CityCenter's credit profile has made tremendous progress with net debt of approximately $1.5 billion and LTM EBITDA from resort operations are roughly $290 million, CityCenter's overall leverage is just above 5 time.

Tremendous progress in the improvement of capital structure at that joint venture.

Our first quarter CapEx was approximately $53 million at our wholly owned domestic resorts and roughly $16 million at MGM Macau.

MGM China spent an additional $28 million on MGM Cotai during the first quarter.

Our wholly owned domestic CapEx guidance for the year remains at roughly $350 million and that includes the amount for this year of the recently announced projects at Monte Carlo and New York, New York.

We expect corporate expense to continue to be in the $40 million to $45 million range per quarter and our stock compensation and depreciation expense in the second quarter is estimated to be consistent with the first quarter.

We estimate that our gross interest expense for the second quarter will be approximately $220 million which includes about $7 million in interest at MGM China and $8 million in non-cash amortization expense.

With that I'll turn it over to Bobby Baldwin to talk more about CityCenter.

Thank you Dan and good morning everyone.

We're excited to report that the first quarter of 2013 CityCenter achieved record EBITDA from the resort operations of $93 million.

ARIA led the way with EBITDA of $78 million, a major improved compared to the first quarter of 2012 where they earned $19 million EBITDA.

We saw a significant increase in table games volume led by a very strong international play associated with Chinese New Year's.

In the first quarter ARIA held 28% compared to 16% in the prior year period while ARIA is still a new property and has limited operating history.

If you compare ARIA's hold during the quarter to its trailing 24-month average then ARIA's hold was positively impacted by $9 million in the quarter.

Slot revenue increased 4% compared to last year's first quarter.

RevPAR at ARIA increased 5% driven by a 2% ADR increase and increase in occupancy.

Convention room nights as a percentage of mix increased by 3 percentage points year-over-year.

We continue to see growth in the food and beverage with a very strong quarter in catering and banquets driven by growth in the convention segment and recent dining enhancements to the property such as Javier's Mexican Restaurant.

Overall food and beverage EBITDA at ARIA increased 20% year-over-year in the quarter.

In February we received notice from Forbes Travel Guide that ARIA Sky Suites earned the prestigious Five-Star award, joining an elite class of resorts.

ARIA Sky Suites along with the MGM Grand Skylofts and Mandarin Oriental at CityCenter are the only three properties in Las Vegas to earn both the AAA Five-Diamond and Forbes Five-Star ratings.

We are very proud of all the employees for achieving these amazing accomplishments.

Vdara's EBITDA continues to improve as occupancy grows and is now approximately 86%.

We are also finalizing construction plans to convert the Silk Road restaurant space into approximately 5,000 square feet of additional meeting and convention space and we expect this to drive both occupancy and rate with completions scheduled for the fourth quarter of this year.

Crystal's EBITDA also increased 20% year-over-year driven by high rents and new store openings.

During the quarter we signed a new lease for Bobby Flay's Burger Palace which will open later this year on the Las Vegas Strip as part of the Crystals complex.

Additionally, we opened Las Vegas Strip Starbucks mid-March and also another Starbucks at the former Pods location inside of Crystals in April.

This concludes my report.

I will turn it over to you, Grant Bowie.

Thanks Bobby.

Again, good morning.

To the Asian listeners, good evening.

For the first quarter, MGM China had another record net revenues of some $748 million.

This was up 6% year-over-year.

In terms of property EBITDA we had our best quarter ever at $193 million excluding the branding fee of $13 million.

EBITDA margin improved to 26.2% from 25.4% a year ago due to a higher contribution from our main floor business which now represents 65% of our EBITDA.

Our overall VIP win rate for the quarter was approximately 2.8%, close to normalized hold, with lower junket hold being offset by higher in-house VIP hold.

Junket turnover was a property record with an almost 15% year-on-year growth.

Volume increased notably and came mostly from our top tier junket operators.

We are seeing success from our level 2 VIP gaming floor expansion which opened last September.

The first quarter in-house VIP business increased volumes by 13% year-over-year.

We also had a record quarter on our main floor table games with volume up 7% and revenues up 26% year-on-year.

We are encouraged to see not only our premium areas such as our supreme and platinum lounges continue to perform well, but also our general main floor product produced record results.

Slot handle increased 28% during the quarter driven by very strong play during our Chinese New Year.

As Jim mentioned we broke ground on MGM Cotai in February and the pace of work continues to increase.

We have completed our general contract tender process and are finalizing the appointment of this very important partner for our project.

Our Cotai project will have 1,600 rooms, 2,500 slots and up to 500 tables.

The project will feature over 85% of gross floor area of non-gaming offerings including restaurants, retail, and entertainment attractions.

As well as foundation work will also have been included for future expansion and remains on schedule for opening in the first half of 2016.

With that I'll turn it back to Jim for his closing remarks.

Thank you.

Thank you, Grant.

Here in Las Vegas we're off to a good start in the quarter and we're excited about a flurry of events and openings in the coming months.

The spectacular 80,000 square foot restaurant lounge and nightclub Hakkasan has just opened to big crowds at the MGM Grand.

Just in time for the Floyd Mayweather fight this weekend and the Rolling Stones next weekend.

Mandalay Bay is eagerly awaiting the opening of the Michael Jackson ONE show by Cirque du Soleil; and a new nightclub, Light; and a day club, Daylight -- both opening around Memorial Day weekend.

Mandalay Bay as you remember has been without a show or a club for two years and past history tells us we should know what to expect when they do open for Mandalay.

Luxor will be the new home of Jabberwocky starting this month and out in June we host Beyonce, Justin Bieber and Pitbull.

The economy here is improving, housing is recovering and our business and leisure customers are responding with higher spending.

We have seen tangible benefits in cross marketing to our select regional markets and we are excited about our future development opportunities.

We always remind ourselves that this economy is hard to predict.

That of course always tempers our enthusiasm but we are off to a good start and we predict good things for the Company in the future.

With that I'll turn it over to the operator for questions.

(Operator Instructions)

Your first question comes from the line of Felicia Hendrix with Barclays.

Hi, good morning.

Jim, based on your comments it sounded like this quarter's results could be interpreted as being inflection point for the Las Vegas strip.

Do you think that's the right way to interpret your prepared remarks?

Well, I think that we knew the first quarter was going to be tough city wide here.

We have talked about that on our last call.

We did a bit better than we expected in the first quarter in the convention side in the year for the year which helped us a little bit on the RevPAR side.

We always knew the second quarter would be a little bit easier comp.

But you know I have to just caution everybody that we've had headstakes in this economy before and the scars of the recession have not fully healed.

But I can tell you that what we're doing is working.

The cost containment is clear.

Our [FTs] are flat year-over-year.

Our efficiencies are leading to good expansion and margins.

Revenues are building.

I think we've picked up some market share.

Chinese New Year's, I think for everyone, was very strong up and down the strip.

It was for us obviously.

But I'd have to say that subject to macro trends which we cannot control, we feel good about Las Vegas, and we know the operating leverage here is very significant if we do get a little help from the broader economy.

Our next question comes from the line of Joe Greff with JPMorgan.

Good morning, everybody.

Congratulations on the strong results.

Grant, you mentioned that overall VIP hold was normal, lower on the junket side, higher in house.

If we were to normalize VIP hold in both of those segments can you help us understand what normalized EBITDA, EBITDA margin would have been?

I think that what we're really saying is it evened itself out.

So, basically the result is pretty well consistent with the normalized hold.

Great.

Thank you.

And with respect to your commentary about trends here in the Q2 on the strip with the 2% RevPAR growth how do you think about that luxury versus non-luxury?

Do we actually see perhaps a wider divergence between those two segments or do you see the lower end benefiting from convention wise and just more activity overall?

That's all for me.

Thank you.

Joe, this is Dan.

I think you're still going to see that divergence between the luxury and the non-luxury as April clearly benefits with a stronger convention calendar.

That will help from a city wide standpoint as being up a little bit here in the second quarter as projected by the LVCDA.

That will help the non-luxury properties clearly but the luxury properties are still driving the way based on their ability to drive that mid-week convention business.

I'd just add to Dan that I think we have said this before.

It's consistent that the convention business in Las Vegas this year will be okay.

It won't be great city wide.

Next year is a big year city wide.

So when you have the kind of city wides we are predicting in 2014 that will accrue to the benefit of, of course.

Mandalay but also to the properties that need Mandalay to have that business -- Luxor, Excalibur -- and also because of the LVCDA, Circus Circus.

So, the cores, this year, are doing well, but I would expect next year, with the better convention business city wide, that they will do better.

Your next question comes from the line of Steven Kent with Goldman Sachs.

Hi.

Just a couple thoughts on the recap of CityCenter especially as these Q1 trends show some sustainability, thoughts on how you could change the capital structure there.

I know you have also talked about doing something with the mall.

Is there an opportunity there?

Then I know people have asked this in a couple different ways because it's striking the difference between high-end versus mid-priced for your properties just on performance.

What are you doing to improve the leisure side of things, Jim?

It sounds like on the conference convention you feel if that strengthens up then there will be a trickle down into some of the mid-price but what can you do on the Friday to Sunday to improve the operating results in these mid-priced properties?

Maybe I'll start on -- so first off it's not a mall.

It's too nice to be a mall.

Sorry about that.

Sorry.

A mall in short hills.

But this is not a mall.

That's just an opportunity.

Really we love Crystals.

There is obviously a great market for retail in the country particularly very high end luxury retail and that's about all we can say at this point because we really love owning it, but there is obviously a financial opportunity.

I will turn it over to you Dan.

I think on the recap, Steve, I think at some point in time here in the future there is going to be an opportunity for CityCenter to re-look and re-cast the debt structure there.

There's call dates that start kicking in in January of next year and that's going to give us an opportunity to really look at a different capitalization of CityCenter both in terms of the debt structure itself and a lower interest rate environment that CityCenter will find itself in as we think about that opportunity.

Then Corey did you want to add?

Sure.

On the convention side, of course our leisure properties with significant convention space and mainly sold out in peak season have a much easier time at raising rates.

On the core side, the leisure business is as strong as ever.

Actually one of the third party providers just even mentioned how strong summer looks, being up over 50%.

I think we're the main benefactor of that.

So as city wide grows, eventually we could reduce some of that, but we are using that to fill a lot of those core properties.

When you look at the core properties there is two sets of core properties.

Really there is three.

There is Circus on the north.

Then you have the south side.

The ones in the middle of the strip -- they're able to drive the rate because they're in a premium location.

We have really improved amenities on those properties.

The leisure component is -- it's very important for those core properties that city wides stay at the level that they're at.

Okay.

Thanks.

Your next question comes from the line of Shaun Kelley with Bank of America.

Hey good morning guys.

I just wanted to ask again back to kind of the operating expense side in Las Vegas.

It seems like there was a really good cost control in the quarter on [R mass] operating expenses were down about 2% year-on-year despite the revenue growth.

Is that level of run rate of cost reduction actually sustainable?

We would have thought at least with adding in a few more rooms back in for MGM Grand that there might be some natural growth in that.

What are you doing to drive that?

Well, Shaun, I'll start and Corey will chime in.

Clearly, as Jim pointed out earlier maintaining our FTEs, which is a little more than half of our overall operating cost, is critical to drive the leverage and flow through in these units.

I think it is sustainable in terms of keeping those costs in check.

There will be some moderate increases we believe going forward as with everything, from time to time in commodity prices and different pieces.

But I think the teams are doing up and down each of our properties here in Las Vegas as well as in our regional properties and even Grant and the team in Macau are laser focused on containing costs and when we do see some increases we are finding ways to mitigate increases with more efficiencies in other areas.

I think overall we're comfortable with what we are seeing right now and there are opportunities to keep expenses in check going forward.

What I would add in is, we are getting smarter and more intelligent with technology on scheduling which is an opportunity to refine our scheduling.

The other area that we've gotten a lot better in is the promotional expense on table games.

When we hold events, when we don't hold events, those are, I think, permanent every quarter recurring savings that we were incurring last year that we should be able to reduce every quarter this year.

So Corey, did those really roll out in the fourth quarter and then into the first?

Is that kind of the timing behind those initiatives.

Yes, we started them -- it's part of the realignment of how we focused on table games that Dan mentioned in his earlier comments but yes they started late in the fourth quarter but really the first quarter was our first full quarter of implementing our new programs.

That's really helpful.

Thanks guys.

Sure.

Your next question comes from the line of Rich Hightower with ISI Group.

Good morning everyone.

This is actually a question for Dan.

Now that you put up a profitable quarter I think this is a relevant question.

Can you just describe maybe in terms to help us for modeling purposes what the tax shield from previous NOLs would be going forward and how we should think about that?

It's a good question because every time we think we have a handle on our tax situation there is always something that changes given the nature of Macau and the earnings coming out of there and how we treat them from that standpoint.

So I think here in the US we do have some NOLs but they really start to kind of burn off.

So as we move forward from a domestic perspective, we'll be looking at more normalized kind of US tax rates but that will be offset by the benefits of Macau.

I think that's going to be where it gets neutralized from a tax standpoint.

Okay, so maybe no real cash impact on the tax shield there given the strength of Macau?

I think that's accurate, Rich.

Okay.

Thanks for that.

Your next question comes from the line of Harry Curtis with Nomura Securities.

Two quick questions.

Can you give us a sense of how much in Vegas your table volumes were up in the first quarter and do you expect that level of lift to continue for the balance of the year?

Okay, Harry, we're going to get that for you right now.

Go ahead, Corey.

Our total table volumes were actually down a little bit, Harry.

Okay.

That does not include ARIA, by the way.

When you include ARIA they're actually --

Harry when you look at the non-bacc table game numbers, they were up when you include ARIA across the board here in Las Vegas from that perspective.

Okay.

Let us get you those numbers.

All right.

Then Jim, a question for you.

It's really kind of a 30,000-foot question for Vegas as a whole.

As you look at load factors through McCarran, they're pretty close to historic highs.

I'm just wondering what indicators, if anything, are you getting from McCarran or the airlines themselves about what's going to prompt them lifting airlift into Vegas which is going to be an important driver of that mid-week business going forward?

We have some good news on the airline front.

I will turn it over to, maybe, Dan.

I think, Harry, when you look at kind of seat capacity going forward as projected through the summer by McCarran, actual seat capacity's actually projected to be up in the forward looking months and just to kind of circle back on your earlier question, Harry, we were up overall system wide here in Las Vegas, up about 3% in table game volume.

That includes ARIA?

Correct.

Okay.

Okay.

Then going back to the airline question, the seat capacity.

Do you have a sense of -- can you remind me what sort of lift do you have?

Do you have any sense of how it looks international versus domestic?

Harry, the seat capacity, especially in the summer is going to be up a few percent which is very positive for us.

Anything looking beyond two to three months it's really hard to look at since the airlines are constantly changing their programs.

The domestic side is constrained for obvious reasons of how they're running their business.

I think the growth in the airlines will be on the international side.

The UK keeps adding flights.

We believe is Copa is very successful - will continue to add flights.

WestJet out of Canada is doing very well.

We're seeing Mexico and a few other European countries adding flights.

So I think as the business travel improves and as the convention business improves going out towards 2014 you will start seeing the domestic airlines adding more capacity to the market also.

Okay.

That's great.

Thanks for the help.

Our next question comes from the line of Robin Farley with UBS.

Thanks.

I know you talked about RevPAR outlook for Q2 being a little bit ahead of Q1.

Do you have any thoughts on Q3 at this point?

I know your comments last quarter had pretty decent visibility on the two quarters out.

I was just wondering what you are seeing there.

Also, I was interested in a comment that, I think it was Corey that made it during the Q&A there about commercial events on table games last year that I guess will be eliminated this year, just to get some color on that.

Well I'll take the RevPAR one, Robin.

There is a lot in the year for the year.

There is quite a bit of movement around when you go out beyond a quarter.

I think we're best suited to do a quarter by quarter forecast and obviously, as we said, we look a little bit better here in the second quarter than the first.

Corey separately said that a couple of the third party providers have talked about strong summer but I don't think we're prepared to give a RevPAR guidance for the third quarter.

And on the second question --

Yes, on the promotional expenses, Robin, what we've done is we've eliminated putting events on top of events and we've also focused on the profitability of all of our players in understanding what promotions should drive them to the market.

And we've been able to eliminate some promotional chips that we were giving in the past.

Yes, I think we announced earlier that Anton Nikodemus, who was the president of Monte Carlo, has assumed the corporate role of casino marketing.

He's brought together all the properties.

We have eliminated a lot of the duplicative events that properties were having on top of one another and also events that are occurring when we don't need to drive events for people.

For example, March Madness -- we used to have events around March Madness.

Well, we know people are going to come for March Madness.

We can reduce some of the slot or baccarat tournaments around that.

So it's just being more coordinated in our marketing approach to the customers, being more targeted.

We only just started that really at the end of last year.

Great.

That's helpful.

Thank you.

Your next question comes from the line of Carlo Santarelli with Deutsche Bank.

Hello, everybody.

Good morning.

Just quickly on the margin front.

Obviously this is the second quarter in a row you guys have showed some pretty strong strip margins and nice healthy growth year-over-year.

Just, before we get ahead of ourselves, I wanted to maybe try and quantify and bucket how those margins would look if we took the Grand out of the mix and maybe tried to adjust a little bit for the deltas in year-over-year table holds.

Carlo, I'll try to answer that as best we can.

The Grand benefited in the quarter from hold.

They were probably the biggest benefactor in the quarter within the portfolio on hold.

But I don't have the numbers stripping out.

If you just look at normalizing hold, so to speak, over the periods our margins here on the Strip would still be up some 80 basis points year-over-year.

Remember we played unlucky last year, to a lower end of a range, and better this year.

When you kind of normalize both those factors you would still be up some 80 odd basis points year-over-year in margin improvement.

That's great, Dan.

That's really helpful.

Thank you.

And then, just really quickly if I could, on ARIA, I know you guys gave a bunch of metrics.

Did you provide gaming revenue, year-over-year, comparison just for the property?

We're taking a look at that.

Sorry.

If I could sneak in one more on the labor front.

I know some of the labor negotiations are starting up again.

Is there anything in there where, I know some of those deals were done at different times, and maybe there is an opportunity here with the latest negotiations to the extent that you're willing to comment on that on a public call if there is any opportunity there on the margin side on a go forward basis.

I will tackle union negotiations while Bobby and Chris are looking at ARIA.

As you know on the union side, particularly the culinary, that comes up every five years.

Historically we have been very successful in negotiating constructively these contracts.

Obviously the economy is always different and it's different today than it was last time.

Our goal here is to forge an agreement that works together with the union, charting the course together, meeting their needs and the needs of the company and all the members.

So we're in the early innings of this game.

We are working with them to construct a package that reflects the conditions of this market -- the economy that we talked about as slowly recovering but could be somewhat fragile.

So we are working with them on that front and if history is any guide we'll come up with a constructive resolution there.

Bobby, do you have anything on ARIA?

The ARIA question of table [gaming wins] when we won $90 million versus $33 million in the comparable quarter in 2012.

And the total gaming revenue was up how much at the property?

Total gaming including slots and everything or just table games?

Total gaming includes slots.

Hold on.

We'll come back with that one.

You got it.

Thank you very much.

Chris is looking at that.

We'll take the next question.

Your next question comes from the line of Thomas Allen with Morgan Stanley.

Good morning.

Your Macau business generates a lot of free cash flow and leverage looks to be low even through the Cotai development period.

Do you think you have an appropriate capital structure in place or is there room to adjust that?

Thank you.

Well, I think, Tom this is Dan, we do have the appropriate capital structure this place.

That balance sheet at MGM China provides us a lot of flexibility going forward to not only carry out MGM China's development plans and growth strategies, but also to continue to look towards rewarding our shareholders back.

And that's evidenced by the dividend policy we put in place and the last two, if it's any example, the special dividends that have been returning capital to shareholders.

So I think if we're all right that's going to continue to bear fruit for the shareholders and allow MGM China to grow going forward.

Your next question comes from the line of Grant Govertsen from Union Gaming.

Hi guys.

Good evening here and good evening to Grant.

Question on Macau -- obviously you've got a very premium operation and as we saw mass market in slots this quarter with win growing faster than drop.

I suppose that's probably due to the premium segment.

But if -- Grant could you give us a little bit more color on what's driving the mass in slots right now?

Is it more on the premium side or the mass mat side?

I think the key issue is that what we have indicated last time was we had really strong growth in our premium.

I think as you have heard on the calls from most of the other concessionary area companies everyone has focus on that.

What we have been doing is continuing to build out the mid-mass, which we know and we have actually seemed to get some depth in development and growth in that area.

As we try do all the time, we try to balance things up as effectively as we can so we don't become over exposed to any component in the market.

For us it's continued development of our existing programs from our premium mass business and then continued reinvestment and investment in building the depth of our marketplace in the general mass areas.

Great.

I know it's early, but how has the reception been on the new aquarium, aquarium project in the Praca?

Great.

It was very difficult to walk through there the last two days.

So those attractions, as we bring in for the summer, as we were able to demonstrate last year, generate higher quality traffic into the property.

That's certainly been a significant advantage for us as we continue to want to build through traffic and more importantly, once we get visitors in, convert them to customers.

Great.

That's it for me.

Thank you.

While we have a break here for a second I think we have a number we want to give you on ARIA.

The total gaming revenue was $130 million this quarter versus $71 million in 2012.

Great.

Thank you Bobby.

Your next question comes from the line of Susan Berliner with JPMorgan.

Hi.

Good morning.

I want to focus on CityCenter.

Dan can you review with us?

I think you said you monetized some of the receivables.

I just wanted to know how much did that generate -- if you could give me any sort of ballpark, and if we could see more monetization of those going forward?

Yes, that was roughly about $40 million in net proceeds that we received in April.

That was all the mortgage notes that CityCenter had had on its books so we're officially out of the mortgage note business at CityCenter.

So, going forward the opportunity really on the residential is the remaining inventory that's left pretty much at Mandarin.

And there's about ten or a dozen Veer penthouse suites that we still own.

So the residential inventory has really been skinnied down to the remaining Mandarin units.

Are you seeing any pick up with the improvement in the housing market on the residential inventory?

We actually have.

I'll kick it over to Bobby.

We've actually seen in the last few months some pick up, particularly in the remaining Mandarin inventory, in terms of sales.

So, yes, we've seen the market strengthen here in Las Vegas, particularly at the Mandarin since that's, as Dan pointed out, our remaining inventory.

We sold and closed five Mandarin Oriental units in the first quarter of 2013.

We did 15 in the month of April.

Great.

Thank you.

Two other questions from me.

Dan, I was wondering if you can update at all on your license, your 50% ownership in Borgata.

And if you guys can also comment on where your position on online gaming.

Sure.

I mean as we stated previously our first priority in New Jersey is our re-application process.

That is underway.

We still have the trust arrangement that we're governed under, the trust account that sits at just over about $130 million in cash in that trust arrangement.

So the process is underway in New Jersey and we will keep you apprised as that continues to unfold going forward.

As far as online -- ?

I will tackle that.

As best we know.

We obviously would still prefer a federal solution here.

We've made that point very clear on calls and with the federal government -- our elected, through the AGA and otherwise -- the reason of course is that a federal solution would have comprehensive law enforcement controls and consistent regulation.

We haven't completely lost hope on that.

There is always a chance that that could occur.

But in the meantime, as you know, state by state by state legislators and governors are passing laws.

And we will participate in that as well whether it's Nevada, New Jersey or elsewhere.

And the opportunity will be to have states compact with one another to create the liquidity that is necessary for poker and our partnership with Bwin.

Party and with Boyd will be a big help to us there.

So it's progressing at a state level.

It's not the preferable approach.

But we think it can be a very profitable business for the gaming industry if done correctly even at the state level.

Thank you.

Your next question comes from the line of Chad Beynon with Macquarie.

Good morning.

Given your positive comments around the summer or your summer expectations in Vegas and the recent opening of Hakkasan and the new MGM Grand rooms, I'm curious how you're thinking about pricing rates at the property with the new strong anchor tenants, new rooms and a property that should essentially serve well in the summer months.

Then secondly, any type of metrics you could highlight since the night club has opened would be helpful as well.

Thanks.

Well we have -- we're very, very proud of our yield management team here.

I have to say that Micah and the team have done a tremendous job of being very, very intelligent in how we're yielding the whole portfolio of rooms company wide including ARIA.

So I would say that, in light of the fact that the third party providers are very optimistic about the summer -- we're hearing that from Expedia particularly and the fact that we have tremendous capital improvements that are occurring this quarter or already have occurred.

Hakkasan you mentioned.

Do not overlook having a Michael Jackson show, a couple night clubs, day clubs over at Mandalay Bay, particularly for the summer.

That's got to help.

I think that we've proven that we can maximize our rate.

We're not going to get ahead of ourselves.

This is still -- there is a lot of inventory in Las Vegas.

A very robust, intense competition.

Given what we have done in our properties, remodeling rooms, improving our F&B offerings, adding entertainment, we are picking up some share and we deserve to get a premium rate in the market.

I think that we do, segment by segment, and we'll continue to balance the supply and demand and certainly through the summer.

Your final question comes from the line of Kevin Coyne with Goldman Sachs.

Thanks for taking the questions.

Just a couple of housekeeping ones.

Update on the Perini litigation.

Is that still scheduled for June?

And then, in Vietnam I noted that you pulled out of that joint venture there.

Just anything to comment there?

And is it something you would consider re-entering if terms were to change?

This is Bobby on the litigation front.

We have a trial date for January 14 next year.

Was that pushed out or was it originally June?

I can't recall.

Part of the trial was going to be -- the case was in two halves.

Half the trial was going to be in June and half later.

The judge has combined the case again and the entire case will be tried in January.

Okay.

Great.

Thanks.

And as far as, Kevin, on the Vietnam front -- we're in a transition period with ACDL.

We're going to part ways here shortly and we don't have any intentions of revisiting that decision.

And there are no further questions in queue at this time.

Thank you, McKenzie.

Given that there is no further questions we'll end the call here.

And thank you all for participating.

This concludes today's conference call.

You may now disconnect.