MGM Resorts International (NYSE:MGM - News) recently inked a contract with Rolling Hills Estates Realty Trust to purchase a remote 150 acres of land in Brimfield, near the Massachusetts Turnpike. The Las Vegas, Nevada-based company plans to set up a world-class property in the name of Rolling Hills Resort on that site.
Management commented that the remote nature of the location along with its proximity to the Mass Pike is in sync to the upcoming property’s psyche. Management was in search of rural setting in accordance with the taste of New Englanders.
The Massachusetts government recently gave its nod to the construction of three casinos in the region. Interested developers like MGM will have to compete for a highly anticipated bidding process to get a license to run one. If the upcoming project materializes, we belive it will offer significant opportunities for growth, as the area is under-served to meet its demand. The development is expected to create 3,000 permanent jobs along with several thousand construction-related jobs.
MGM Resorts owns and operates 15 properties located in Nevada, Mississippi and Michigan, and had 50% investments in three other properties in Nevada and Illinois, as of November 3, 2011. We believe in order to grow its brand beyond the highly competitive existing market places, the company is targeting other locations. MGM recently signed a deal with Creative Casinos for a minority equity interest, which will provide exposure to the Southwest Louisiana and Texas markets.
While MGM Resorts managed to acquire a land in Massachusetts, its close competitor Wynn Resorts Ltd. (NasdaqGS:WYNN - News) is reportedly struggling for a plot. A proposal to build a Wynn Resorts casino adjacent to Gillette Stadium in Foxborough, Massachusetts, is in uncertainty as the town's residents are against a casino. However, the hope is still not ruined.
MGM management is in talks with the residents of Brimfield and is open to their suggestions. Management also opened an office at Brimfield to ensure a smooth and politically hassle-free development process. MGM Resort currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are maintaining our Neutral recommendation on the stock over the long term.
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