10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number: 000-53938

Nevada Property 1 LLC

(Exact name of registrant as specified in its charter)

Delaware	27-1695189
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3708 Las Vegas Boulevard South Las Vegas, Nevada	89109
(Address of principal executive offices)	(Zip Code)

702-698-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The Registrant’s Class A and Class B membership interests are not publicly traded. As of November 7, 2014 Nevada Voteco LLC owns all of the 100 Class A voting membership interests and Nevada Mezz 1 LLC owns all of the 100 Class B non-voting membership interests of the Registrant.

NEVADA PROPERTY 1 LLC

INDEX

	Page Number
PART I — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements		1
Condensed Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013		1
Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September  30, 2014 and 2013		2
Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September  30, 2014 and 2013		3
Notes to Condensed Consolidated Financial Statements		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		33
Item 4. Controls and Procedures		33
PART II — OTHER INFORMATION		35
Item 1. Legal Proceedings		35
Item 1A. Risk Factors		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 3. Defaults Upon Senior Securities		36
Item 4. Mine Safety Disclosures		36
Item 5. Other Information		36
Item 6. Exhibits		37
SIGNATURES		38

Part I — Financial Information

Item 1 — Condensed Consolidated Financial Statements

NEVADA PROPERTY 1 LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30, 2014			December 31, 2013
	(Unaudited)
ASSETS
Current assets:
Cash held with Deutsche Bank	$	23,596		$	32,867
Cash held with third parties and on hand		69,127			25,793
Total cash and cash equivalents		92,723			58,660
Accounts receivable, net		53,590			53,564
Due from affiliate		26,905			56,413
Inventories		13,352			14,575
Deferred income taxes		10,823			11,614
Restricted cash		600			656
Prepaid expenses and other assets		18,073			25,619
Total current assets		216,066			221,101
Property and equipment, net		2,745,659			2,854,990
Intangible asset, net		8,704			9,956
Deferred income taxes		80,558			83,354
Other assets		35,112			35,421
Total assets	$	3,086,099		$	3,204,822
LIABILITIES AND MEMBERS’ DEFICIT
Current liabilities:
Accounts payable	$	17,744		$	14,403
Interest payable to affiliate		9,472			9,859
Accrued and other liabilities		91,337			83,046
Total current liabilities		118,553			107,308
Accounts payable — construction		237			5,883
Accounts payable — retention		—			4,059
Accrued and other liabilities — construction		1,569			7,792
Loan payable to affiliate		3,428,094			3,499,917
Other liabilities		4,394			4,982
Total liabilities		3,552,847			3,629,941
Commitments and contingencies (Note 11)
Members’ deficit		(466,748	)		(425,119	)
Total liabilities and members’ deficit	$	3,086,099		$	3,204,822

See accompanying notes to condensed consolidated financial statements.

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NEVADA PROPERTY 1 LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited — In thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues:
Casino	$	55,567		$	44,374		$	156,067		$	115,895
Hotel		80,346			66,902			236,886			201,900
Food and beverage		83,480			81,312			264,159			246,038
Entertainment, retail and other		12,200			8,816			30,784			25,647
Gross revenues		231,593			201,404			687,896			589,480
Less — promotional allowances		(42,630	)		(31,310	)		(115,957	)		(88,677	)
Net revenues		188,963			170,094			571,939			500,803
Operating expenses:
Casino		34,145			28,582			96,644			83,973
Hotel		8,602			9,921			27,151			30,279
Food and beverage		54,599			54,567			174,102			162,520
Entertainment, retail and other		11,424			8,203			29,826			22,263
Sales and marketing		12,620			11,445			50,102			49,383
General and administrative		27,620			29,568			79,278			80,466
Corporate		12,787			3,193			24,563			13,856
Pre-opening		—			1,727			—			2,172
Loss on disposal of assets		2			79			117			85
Asset impairment		—			—			1,506			—
Depreciation and amortization		41,674			42,759			125,616			132,806
Total operating expenses		203,473			190,044			608,905			577,803
Operating loss		(14,510	)		(19,950	)		(36,966	)		(77,000	)
Other income (expense):
Net settlement and default income		—			—			245			217
Interest and other income		8			11			38			28
Interest expense due to affiliate, net of amounts capitalized		(9,187	)		(9,903	)		(28,251	)		(30,197	)
Total other income (expense)		(9,179	)		(9,892	)		(27,968	)		(29,952	)
Loss before income taxes		(23,689	)		(29,842	)		(64,934	)		(106,952	)
Income tax benefit		8,340			10,437			23,305			37,608
Net loss	$	(15,349	)	$	(19,405	)	$	(41,629	)	$	(69,344	)

See accompanying notes to condensed consolidated financial statements.

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NEVADA PROPERTY 1 LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited — In thousands)

	Nine Months Ended September 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(41,629	)	$	(69,344	)
Deferred income taxes		(23,318	)		(37,608	)
Depreciation and amortization		125,616			132,806
Asset impairment		1,506			—
Loss on disposal of assets		117			85
Changes in operating assets and liabilities:
Accounts receivable, net		(26	)		11,742
Due from affiliate		56,413			83,105
Inventories		1,223			(1,494	)
Prepaid expenses and other assets		7,583			6,802
Accounts payable		3,341			2,822
Accrued and other liabilities		7,975			(297	)
Interest payable to affiliate		(387	)		(926	)
Restricted cash		56			444
Net cash provided by operating activities		138,470			128,137
Cash flows from investing activities:
Ordinary capital expenditures		(14,676	)		(12,234	)
Capital expenditures from major developments and for construction projects		(17,908	)		(37,206	)
Net cash used in investing activities		(32,584	)		(49,440	)
Cash flows from financing activities:
Borrowings under loan payable to affiliate		9,777			37,627
Principal payments under loan payable to affiliate		(81,600	)		(98,105	)
Net cash used in financing activities		(71,823	)		(60,478	)
Net increase in cash and cash equivalents		34,063			18,219
Cash and cash equivalents at beginning of period		58,660			48,811
Cash and cash equivalents at end of period	$	92,723		$	67,030
Supplemental disclosure of cash flow information:
Cash paid for interest due to affiliate, net of interest capitalized	$	28,839		$	31,123
Non-cash investing activities:
Change in accrued additions to construction in progress	$	(15,928	)	$	8,512

See accompanying notes to condensed consolidated financial statements.

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NEVADA PROPERTY 1 LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Description of the Business

Company Overview

Sale or Transfer of Members’ Equity Interests

Nevada Property 1 LLC, a limited liability company organized in Delaware (the “Company”), owns and operates The Cosmopolitan of Las Vegas (the “Property” or “The Cosmopolitan”) which commenced operations on December 15, 2010.

Nevada Voteco LLC (“Nevada Voteco”) holds 100% of the Company’s Class A voting membership interests and Nevada Mezz 1 LLC (“Nevada Mezz”) holds 100% of the Company’s Class B non-voting membership interests. The Company continues in perpetuity until dissolved upon the election of Nevada Mezz and Nevada Voteco or through a judicial dissolution under Section 18-802 of the Delaware Limited Liability Company Act. Nevada Voteco and Nevada Mezz are collectively referred to as the “Members” within this Quarterly Report on Form 10-Q.

On May 15, 2014, we reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) that Nevada Mezz, Deutsche Bank AG (“Deutsche Bank”) and the Company had entered into a Purchase Agreement (the “Purchase Agreement”) with BRE Spade Mezz 1 LLC, an affiliate of Blackstone Real Estate Partners VII L.P., for the sale of all of the Company’s Class B non-voting membership interests held by Nevada Mezz. The Purchase Agreement also provides for the transfer to BRE Spade Voteco LLC, a newly-formed affiliate of Blackstone Real Estate Partners VII L.P., of all of the Company’s Class A voting membership interests held by Nevada Voteco (together with the sale of Class B interests, the “Company Sale”). BRE Spade Mezz 1 LLC and BRE Spade Voteco LLC are collectively referred to as the “Purchaser” in this Quarterly Report on Form 10-Q.

Subject to potential net working capital adjustments as defined in the Purchase Agreement, the all cash consideration for the membership interests totaled approximately $1.73 billion. The Purchase Agreement was unanimously approved by the Company’s Board of Directors.

The consummation of the Company Sale is subject to the receipt of certain regulatory approvals, along with other customary closing conditions.

The Company currently maintains a $3.9 billion credit facility (the “Credit Facility”) with the Deutsche Bank AG Cayman Islands Branch (“DBCI”), a branch of Deutsche Bank AG, as well as other related party agreements for member expense reimbursements, among other things. See Note 9 — Loan Payable and Interest Payable to Affiliate and Note 10 — Related Party Transactions for further discussion concerning termination, discharge and release of the Company’s obligations related to the Credit Facility and the intra-group arrangements upon successful completion of the Company Sale.

Corporate Structure

The Company’s wholly-owned subsidiaries are Nevada Restaurant Venture 1 LLC (“Nevada Restaurant”), which was formed on November 24, 2009 as a limited liability company in Delaware and Nevada Retail Venture 1 LLC (“Nevada Retail”), which was also formed on November 24, 2009 as a limited liability company in Delaware. Nevada Restaurant master leases the Property’s restaurants and the nightclub from the Company and has entered into management agreements with third-party restaurant operators and a nightclub operator to manage and operate their respective establishments at the Property. Nevada Retail master leases the retail spaces at the Property from the Company and operates certain of the retail spaces within the Property. In addition, Nevada Retail has also entered into lease agreements with third-party retail operators to manage and operate their respective retail businesses at the Property.

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The Company’s operations, which includes hotel, casino, food and beverage, retail, spa and entertainment and other related operations, are conducted entirely at the Property. Given the integrated nature of these operations, the Company is considered to have one operating segment.

The principal executive offices of The Cosmopolitan of Las Vegas are located at 3708 Las Vegas Boulevard South, Las Vegas, Nevada 89109 and the telephone number is (702) 698-7000. The Cosmopolitan’s internet website is located at www.cosmopolitanlasvegas.com. The information on our website is not part of this Quarterly Report on Form 10-Q.

2. Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Principles

The unaudited interim condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the SEC. Although we believe the disclosures made are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules or regulations. In management’s opinion, all adjustments and normal recurring accruals necessary for a fair presentation of the results for the interim periods have been made. The unaudited results for the three and nine months ended September 30, 2014 are not necessarily indicative of results to be expected for the full fiscal year. The December 31, 2013 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K which was filed with the SEC on March 21, 2014.

The Company is an indirect wholly-owned subsidiary of Deutsche Bank. In the normal course of business, the Company’s operations may include significant transactions conducted with Deutsche Bank or affiliated entities of Deutsche Bank.

Restricted Cash

Restricted cash consists primarily of tokes (tips) earned by our CoStars (the Company identifies its staff as “CoStars”) in the Company’s slot and table games departments and condominium sales deposits plus earned interest that are held in interest bearing escrow accounts. The restricted cash balance at September 30, 2014 is comprised of $0.0 million of advance condominium deposits and $0.6 million of tokes. At December 31, 2013, the restricted cash balance is comprised of $0.3 million of advance condominium deposits and $0.4 million of tokes.

Inventories

Inventories consist of retail merchandise, food and beverage items which are stated at the lower of cost or market value. Cost is determined by the weighted average identification method.

Intangibles

The Company’s finite-lived intangible asset consists of the cost of a property easement right which is amortized using the straight-line method, which approximates the effective interest method, over the life of the easement right of nine years.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets,

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determining the adequacy of reserves for self-insured liabilities and the Identity Membership Program (“Identity”), our customer guest reward program, estimated cash flows in assessing the recoverability of long-lived assets and asset impairments, and contingencies and litigation. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Although management believes these estimates are based upon reasonable assumptions within the bounds of its knowledge of the Company’s business and operations, actual results could differ materially from those estimates.

Fair Value of Financial Instruments

The carrying value of the Company’s cash and cash equivalents, restricted cash, and accounts payable approximates fair value due to their short-term maturities. All of the Company’s debt is held by an affiliate and accrues interest at an interest rate derived from the three-month London Interbank Offering Rate (“LIBOR”) plus a margin of 85 basis points (0.85%).

LIBOR is determined two days in advance of the funding based on publicly available quotes published by Reuters. Interest is calculated on the basis of actual days outstanding over a 360-day year. Given the related party nature of the Company’s debt, it is unlikely that the Company could obtain similar financing on the same terms with a third-party in an arm’s length transaction.

Reclassifications

For the three and nine months ended September 30, 2013, we have reclassified certain revenues and operating expenses on the Company’s consolidated statement of operations to conform to current period presentations. These reclassifications had no effect on the previously reported operating loss or net loss.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of certain nonfinancial assets. ASU No. 2014-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. Management is currently assessing the impact of the adoption of this accounting pronouncement on the Company’s consolidated financial statements in future periods.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern — Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40). ASU No. 2014-15 requires management to provide an interim and annual assessment concerning an entity’s ability to continue as a going concern, and also requires disclosures under certain circumstances. ASU No. 2014-15 is effective for fiscal years beginning after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. It is currently management’s intent to adopt this accounting pronouncement upon the effective date.

No other new accounting pronouncements issued or effective during 2014 or 2013 have had or are expected to have a material impact on the Company’s financial position or results of operations.

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3. Income Taxes

For the three months ended September 30, 2014 and 2013, the effective income tax rates were (35.2%) and (35.0%) for each of the respective periods. For the nine months ended September 30, 2014 and 2013, the effective income tax rates were (35.9%) and (35.2%) for each respective period.

Due to the September 2014 opening of a Canadian satellite office, the Company is now subject to income tax filing requirements in Canada. As such, the Company’s tax jurisdictions are the United States and Canada. Effective January 1, 2012, pursuant to broader tax reorganization, the Company is part of a Corporate Consolidated Tax Group (the “U.S. Consolidated Group”) owned by a subsidiary of Deutsche Bank. As a result, the Company joined the U.S. Consolidated Group after having been a separate taxpayer in 2011.

During the quarter ended June 30, 2013, the IRS notified the Company that its 2011 federal income tax return was selected for examination. As of September 30, 2014, the IRS has not commenced an audit on the aforementioned tax year period nor have we received any additional correspondence regarding the matter. The Company believes that it has no uncertain tax positions; however, there is no assurance that the taxing authorities will not propose adjustments that are different than the Company’s expected outcome and impact the provision for income taxes. As applicable, we recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes. For the three and nine months ended September 30, 2014, there were no accrued penalties and/or interest.

4. Accounts Receivable, Net

Net accounts receivable consist of the following:

	September 30, 2014			December 31, 2013
(In thousands)	(Unaudited)
Casino	$	34,053		$	29,279
Hotel		19,294			19,104
Other		7,311			10,335
		60,658			58,718
Less: allowance for doubtful accounts		(7,068	)		(5,154	)
	$	53,590		$	53,564

Accounts receivable, including casino and hotel receivables, are typically non-interest bearing. The Company issues credit to approved casino customers following investigations of creditworthiness. The allowance for doubtful accounts is estimated based on specific review of customer accounts as well as management’s experience with collection trends in the gaming and hospitality industry and current economic and business conditions.

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5. Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Prepaid expenses	$	12,218	$	20,604
Other assets		5,855		5,015
	$	18,073	$	25,619

Prepaid expenses as of September 30, 2014 and December 31, 2013 consist primarily of expenses relating to insurance, gaming taxes, marketing, operations, property maintenance and other taxes. Other assets as of September 30, 2014 and December 31, 2013 consist primarily of imprest funds relating to our partner restaurants and security deposits.

6. Property and Equipment, Net

Net property and equipment are stated at the lower of cost or fair value and consist of the following:

	September 30, 2014			December 31, 2013
(In thousands)	(Unaudited)
Land	$	110,454		$	110,454
Buildings and buildings and land improvements		2,744,404			2,743,416
Furniture, fixtures and equipment		501,873			493,221
Construction in progress		12,075			6,652
Less: accumulated depreciation		(623,147	)		(498,753	)
	$	2,745,659		$	2,854,990

Depreciation expense of $41.3 million and $42.3 million was incurred during the three months ended September 30, 2014 and 2013, respectively, and $124.4 million and $131.6 million was incurred during the nine months ended September 30, 2014 and 2013, respectively.

The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. Interest of $0.3 million and $0.1 million was capitalized for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, interest of $0.3 million and $0.1 million, respectively, was capitalized.

In July 2014, the Company announced the closure of the Vegas Nocturne live entertainment performance show at Rose. Rabbit. Lie. As a result, the Company determined that certain long-lived assets related specifically to the show may be impaired. Accordingly, the Company estimated the undiscounted future cash flows to be generated from the identified long-lived assets over their remaining useful life to continue to be negative, resulting in a $1.5 million write-down of the identified assets, which was reported as an asset impairment in the Company’s condensed consolidated statements of operations for the three months ended June 30, 2014 and the nine months ended September 30, 2014. No potential impairment charges were identified or recorded by the Company during the prior year periods or for the three months ended September 30, 2014.

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7. Other Assets

Other long-term assets primarily consist of the Company’s base stock of china, glassware, uniforms, etc., as well as a deposit for workers’ compensation claims incurred but not reported (“IBNR”), a loss payout account for the Company’s owner controlled insurance program (“OCIP”). The IBNR reserve estimate is determined on our actual historical expense experience and reporting patterns.

During certain construction periods, the Company maintains a comprehensive OCIP for the following insurance coverage: workers’ compensation, primary general liability, excess liability, contractors’ pollution legal liability, builders’ risk and project professional liability. The general contractor and all of the subcontractors working on the Property were required to enroll in the program.

The Company is exposed on a first dollar loss basis for claims filed under either the workers compensation or general liability portions of the OCIP. The Company retains the first $250,000 of the builders’ risk of loss, and $500,000 of each general liability, employer’s liability, and workers’ compensation claims. Claims that exceed the maximum loss amount of $500,000 per claim are covered by a traditional insurance program. The loss payout account receives interest at a rate based on the terms of the policy. The loss payout account will remain open and continue to pay claims until all claims are paid and closed or until the Company’s obligations have been met. The completed operations and professional liability claims period remains open for ten years following the completion of the Property in compliance with Nevada regulations. For insurance coverage purposes, the project completion date was established as December 1, 2010. Workers’ compensation claims remain open until all claims are settled or benefits paid. Once all claims are paid and all obligations are settled, any residual funds in the loss payout account will be returned to the Company. The Company believes the existing balance in the loss payout account of $19.3 million at September 30, 2014 is sufficient to pay all existing and expected future claims related to the Property.

8. Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Accrued accounts payable	$	13,537	$	12,846
Accrued payroll costs		29,994		21,566
Deposits — patrons		3,232		5,098
Advance deposits		14,199		12,896
Chip liability		2,717		5,767
Taxes payable		10,762		7,147
Other liabilities		16,896		17,726
	$	91,337	$	83,046

During the three and nine months ended September 30, 2014, the Company recognized $7.6 million and $12.7 million, respectively, in expense related to The Cosmopolitan of Las Vegas Incentive Award Plan, The Cosmopolitan of Las Vegas Management Exit Award Plan and The Cosmopolitan of Las Vegas Retention Bonus Plan associated with the signing of the Purchase Agreement. These amounts were included within corporate operating expenses on the condensed consolidated statements of operations. Additional amounts of up to $5.6 million could be payable under the agreements upon closing of the Company Sale.

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9. Loan Payable and Interest Payable to Affiliate

The Company maintains a $3.9 billion credit facility which includes a $1.6 billion committed line of credit with DBCI. DBCI has no obligation to provide the Company with additional funding beyond the Credit Facility. The current expiration of the Credit Facility is December 2015. Borrowings carry an interest rate of LIBOR plus a margin of 85 basis points (0.85%). Interest on the loan is payable in arrears and is due and payable on the first business day of each quarter. The Credit Facility does not include any financial covenants.

Under the terms of the Credit Facility, proceeds may be used to pay for (i) the costs of constructing and completing our fully-integrated resort; (ii) Property operating deficits; and, (iii) payment of interest on the Credit Facility to the extent that cash flow from the Property is insufficient to pay such interest after paying the cost of operating the Property. All outstanding debt becomes due and payable upon a change of control of the Company.

The total amount of the loan payable to affiliate at September 30, 2014 and December 31, 2013 is $3.4 billion and $3.5 billion, respectively. Additionally, at September 30, 2014 and December 31, 2013, the Company has an interest payable to affiliate of $9.5 million and $9.9 million, respectively, with a September 30, 2014 interest rate of 1.1% and, for the nine months ended September 30, 2014, a weighted average interest rate of approximately 1.1%.

The Company classifies construction-related accounts payable, retention and accrued and other liabilities as long-term liabilities as they are financed by the Company’s Credit Facility and, therefore, will not require the use of working capital.

As discussed in Note 1 — Organization and Description of Business — Company Overview — Sale or Transfer of Members’ Equity Interests, on May 15, 2014, the Company entered into the Purchase Agreement for the Company Sale. The Purchase Agreement provides that on or prior to the closing of the Company Sale, Deutsche Bank or its applicable affiliate will release and discharge the Company from all further obligations under the Credit Facility at no cost to the Purchaser or the Company or its subsidiaries.

10. Related Party Transactions

The Company is involved in significant financing and other transactions with certain of its affiliates and Deutsche Bank. The following table sets forth amounts held with, receivable from and payable to affiliates and Deutsche Bank:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Cash held with Deutsche Bank	$	23,596	$	32,867
Due from affiliate		26,905		56,413
Loan payable to affiliate		3,428,094		3,499,917
Interest payable to affiliate		9,472		9,859

Prior to January 1, 2014, Deutsche Bank provided certain administrative and other support services to the Company, including accounting, development management, procurement logistics, and legal. The Company was charged $0.1 million during each of the respective three and nine months ended September 30, 2013.

On October 21, 2010, the Company entered into an agreement with Nevada Voteco to pay for all expenses relating to Nevada Voteco and the Nevada Voteco members including costs incurred for the services of all advisors and consultants to the extent such costs are reasonable and documented. On behalf of Nevada Voteco, the Company paid $0.2 million during each of the three months ended September 30, 2014 and 2013, respectively, and $0.6 million and $0.7 million during the nine months ended September 30, 2014 and 2013, respectively.

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The Purchase Agreement provides that on or prior to the closing of the Company Sale, Deutsche Bank or its applicable affiliate will release and terminate all intercompany agreements and all accounts receivable and all accounts payable in connection with the Purchase Agreement, at no cost to the Purchaser or the Company or its subsidiaries.

Effective January 1, 2012, pursuant to a broader tax reorganization, the Company became part of a U.S. Consolidated Group owned by a subsidiary of Deutsche Bank. As of September 30, 2014 and December 31, 2013, the Company had a current tax-effected net operating loss of $26.9 million and $56.4 million, respectively, which will be utilized by the U.S. Consolidated Group, and which is presented as a component of the receivable from affiliate in the accompanying condensed consolidated balance sheets. During the three months ended June 30, 2014, the Company was reimbursed $56.4 million for the utilization of its net operating losses in prior periods by the U.S. Consolidated Group.

In addition, the Company generated $23.7 million ($8.3 million, tax-effected) of net operating losses in the three months ended September 30, 2014 which are presented as a component of due from affiliate in the accompanying condensed consolidated balance sheet. The Company generated $29.8 million ($10.4 million, tax-effected) of net operating losses in the three months ended September 30, 2013. For the respective nine months ended September 30, 2014 and 2013, the Company generated $64.9 million ($23.3 million, tax-effected) and $107.0 million ($37.6 million, tax-effected) of net operating losses.

11. Commitments, Contingencies and Litigation

Prior to the issuance of any of its quarterly or annual financial results and for the purposes of accrual and/or disclosure, we analyze each of our material legal proceedings and other contingencies to determine whether an estimate of a probable or reasonably possible loss or range of loss can be made based upon the facts and legal assessment of such matters. During such assessment, we consider all factors that may impact this assessment, including, without limitation, (a) the stage of the proceeding; (b) the damages, penalties and costs sought; (c) the factual matters that remain to be resolved; and (d) the legal principles that are the subject of the proceeding. It is often not possible to estimate the loss or a range of possible loss, particularly where (i) the damages sought are unsubstantiated or indeterminate; (ii) the discovery or other material legal proceedings are incomplete; (iii) the proceedings are in the early stages and there is insufficient information available to assess the viability of the stated grounds; (iv) the matters present legal uncertainties; or (v) there are significant facts in dispute. In such cases, there are considerable uncertainties regarding the resolution of the proceeding, which may preclude the determination of the reasonably possible loss or range or loss.

Class Action Suits

a. Wage and Hour

During late 2012, the Company was put on notice and/or served with two separate purported class action lawsuits related to alleged unpaid compensation for time incurred by CoStars’ while on Property for donning and doffing of the CoStars’ required uniform, alleged improper rounding of time for hours worked and various other claims related to alleged unpaid compensation. One of the purported wage and hour class action lawsuits is pending in the Eighth Judicial District Court for Clark County, Nevada (“Nevada State Court”), and one is pending in the U.S. District Court for the District of Nevada. The discovery period as to liability has closed in both cases.

In 2014, the plaintiffs’ in the Nevada State Court action filed a motion to certify all proposed classes. Additionally, in June 2014, the plaintiffs’ filed various liens against the Property. The Company has opposed the motion to certify all classes and filed motions for summary judgment and dismissal. In September 2014, the Nevada State Court ordered the plaintiffs’ liens to be expunged. No decisions on the dispositive motions have been issued.

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With respect to the U.S. District Court for the District of Nevada actions, during 2014, the Company filed a motion to decertify the one conditionally certified class and for summary judgment and dismissal. Plaintiff filed a motion to certify all classes of employees under the federal rules. All of these motions remain pending at this time.

During the second quarter of 2013, as part of an ongoing assessment of our wage and hour cases, we accrued an estimated loss contingency of $3.0 million (reported as a corporate operating expense in the condensed consolidated statement of operations beginning with the June 30, 2013 quarterly reporting period). A portion of the loss contingency was utilized in the October 2013 settlement of a third purported wage and hour class action matter, with subsequent payment occurring during the first quarter of 2014. We will continue evaluating the adequacy of this accrual as the cases develop. Specific additional factors applicable to each case that prevent the Company from providing an estimate of reasonably possible loss in excess of amounts accrued or range of loss include, but are not limited to: (1) whether class certification will be granted and the scope of any class or subclass; (2) the quantification of highly variable damages claimed by the purported classes and subclasses asserted in separate, but overlapping litigation are unspecified or indeterminate; and (3) the outcome of any future settlement negotiations, should they occur, as they may apply to limit the class or eliminate all class claims. Legal fees associated with the cases are recognized as incurred when the legal services are rendered, and are, therefore, not recognized as part of the loss contingency accrual.

The Company believes that it has meritorious defenses with respect to the remaining open matters and intends to defend its positions vigorously.

b. Alleged Unlawful Taping/Recording

A purported class action lawsuit was filed during the quarterly period ended September 30, 2012 in Superior Court in the State of California against the Company, alleging violation of the California Penal Code regarding the unlawful taping or recording of calls. On August 31, 2012, the Company moved the case to U.S. District Court for the Southern District of California. Subsequently, the Company filed a motion to dismiss, or in the alternative, to strike the class allegations. On July 15, 2013, the U.S. District Court for the Southern District of California issued an order denying these motions.

Significant discovery has commenced and depositions have occurred, but no motions to certify a class or subclasses have been filed. All discovery that relates to class certification issues must be completed by January 2015 and the plaintiff must file a motion for class certification by March 2015. The Company will file its opposition to any motion for class certification by April 2015. The U.S. District Court for the Southern District of California will set a pretrial schedule after its ruling on the class certification motion.

Substantial questions of law and fact are unresolved. Specific additional factors applicable to this case that prevent the Company from providing an estimate of reasonably possible loss or range of loss include, but are not limited to: (1) whether class certification will be granted and the scope of any class or subclass; (2) the quantification of highly variable damages claimed by the purported class are unspecified or indeterminate; and (3) the outcome of any future settlement negotiations, should they occur, as they may apply to limit the class or eliminate all class claims. As a result, the Company cannot at this time determine the potential impact of the lawsuit on the consolidated financial position, cash flows, or results of operations of the Company. The Company believes that it has meritorious defenses with respect to this matter and intends to defend its position vigorously.

Given the uncertainty of the procedural and substantive legal and factual matters set forth above, no estimate of the reasonably possible loss or range of loss in excess of amounts accrued, if any, can be made at this time with respect to the wage and hour and alleged unlawful taping/recording purported class action lawsuits, nor can the Company determine when it will be able to make such an estimate. Our assessment of these matters may change based on future unexpected events. An unexpected adverse judgment could cause a material impact on our business operations, results of operations or financial position. Unless otherwise expressly stated, we believe costs associated with litigation will not have a material impact on our financial position or liquidity, but may be material to the results of operations in any given period.

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Commitments and Other Legal Proceedings

a. Property General Contractor and Other Purchase Obligations

During 2012, the Company engaged Penta Building Group (“Penta”) to act as the general contractor for certain Property projects. Penta operates under a guaranteed maximum price (“GMP”) contract that defines the scope of work to be performed, establishes the budget for the scope of work, and sets the general time scale of the job. At September 30, 2014 and December 31, 2013, the respective remaining amounts expected to be paid to Penta under the GMP and approved change orders total $0.0 million and $9.5 million.

As of September 30, 2014 and December 31, 2013, the Company had total construction commitments of $1.8 million and $17.7 million, respectively.

Within the Company’s credit line of $3.9 billion from DBCI is a revolving line of credit of $20.0 million reserved for purposes of issuing standby letters of credit. At September 30, 2014, the Company maintained two standby letters of credit totaling $2.6 million pursuant to agreements related to insurance and an administrative office lease. There were no outstanding borrowings against these standby letters of credit as of September 30, 2014.

Subsequent to September 30, 2014, the $2.2 million standby letter of credit relating to insurance services was cancelled.

b. Condominium Hotel Litigation

As disclosed in prior periods, the Company was a named defendant in a number of lawsuits and arbitrations concerning the purchase and sale of condominium hotel units located within the East and West Towers of the Property. The thrust of the claims were virtually the same in every matter. The plaintiffs alleged, among other things, that the project had materially changed and that delays in the completion of the Property constituted a material breach by the Company, thus permitting the plaintiff/purchaser to rescind their contract and receive a full refund of their earnest money deposit, plus interest thereon. The Company was represented in each of these matters by outside legal counsel.

On or about August 26, 2013, a purported class action lawsuit was filed against the Company in the U.S. District Court for the Central District of California, captioned Lenny Spangler v. Nevada Property 1 LLC, et al., alleging, among other things, that former class action settlements entered into by the Company with buyers of condominium hotel units in the project were fraudulently induced, and seeking to recover all amounts paid to or retained by the Company in such settlements. During 2014, the plaintiff agreed to dismiss the case in exchange for a waiver and release by the Company of its claims for costs related to the lawsuit. A formal order of dismissal was subsequently entered with the U.S. District Court for the District of Nevada.

At December 31, 2013, there were two condominium hotel units remaining under contract at The Cosmopolitan (the “Okada Unit” and the “Mastej Unit”). During the three months ended March 31, 2014, the Company prevailed in its efforts to confirm and enforce prior arbitration awards for each of the Okada Unit and the Mastej Unit. As such, the applicable earnest money deposits were released to the Company.

On or about March 3, 2014, a complaint was filed against the Company in the U.S. District Court for the Central District of California, captioned Donald Okada v. Nevada Property 1 LLC, et al., alleging, among other things, that former class action settlements entered into by the Company with buyers of condominium hotel units in the project were fraudulently induced thus permitting the plaintiff to recover the full earnest money deposit and related attorney fees. During July 2014, the complaint against the Company was dismissed without prejudice and the plaintiff was granted leave to file an amended complaint. On or about July 21, 2014, the plaintiff filed an amended complaint in the U.S. District Court for the Central District of California. Subsequently, the U.S. District Court for the Central District of California granted the Company’s motion to transfer venue of the case to the U.S. District Court for the District of Nevada. In October 2014, the Company submitted a motion in the case to compel the matter to binding arbitration.

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With respect to the Mastej Unit, on or about April 1, 2014, a Notice of Appeal was filed with the Nevada Supreme Court regarding the grant of the Company’s motion to confirm and enforce the arbitration award. That matter is in the earliest stages of proceedings.

c. Hearst Trademark

In December 2009, the Company entered into a co-existence agreement with Hearst Communications, Inc. (“Hearst”), which resulted in a settlement and dismissal of all trademark infringement claims that were the subject of an ongoing lawsuit between the Company and Hearst. The co-existence agreement provides that the Company may utilize the “Cosmopolitan” name and marks within certain defined parameters. Specifically, the co-existence agreement provides that the Company should use (i) the word “the” preceding the word “Cosmopolitan” (e.g. “The Cosmopolitan”), or (ii) words identifying physical locations or attractions of our hotel-casino properties preceding or following the word “Cosmopolitan” (e.g., “Cosmopolitan Residences” or “Cosmopolitan Beach Club”), or (iii) “Las Vegas” preceding and/or following the word “Cosmopolitan” (e.g., “Cosmopolitan Las Vegas”, etc.). The co-existence agreement further provides that the use of the “Cosmopolitan” marks be limited to the operation, promotion, marketing, and advertising of hotel-casino properties and related products and services. The co-existence agreement also provides for certain limitations regarding the use of “Cosmopolitan” marks in connection with women’s fashion products and the use of the term “Cosmo”.

d. Patent Infringement

On July 14, 2013, the Company filed a lawsuit against Activision TV, Inc. (“Activision”) in the U.S. District Court for the District of Nevada for a declaration that it is not infringing on various patents owned by Activision relating to digital displays installed at the Property by third-party vendors. During the quarter ended June 30, 2014, the Company resolved the case with no financial impact.

e. Vegas Nocturne

In July 2014, the Company announced the closure of the Vegas Nocturne live entertainment performance show at Rose. Rabbit. Lie., and, based upon contractual terms, the cessation of its relationship with Spiegelworld CSC, LLC (“Spiegelworld”). On August 6, 2014, Spiegelworld filed a complaint in the District Court of Clark County, Nevada, alleging among other things, causes of action for breach of contract and declaratory relief.

On or about August 28, 2014, the Company filed an answer and counterclaim against Spiegelworld in the District Court of Clark County, Nevada, alleging, among other things, causes of action for breach of contract, fraud, breach of fiduciary duties and injunctive relief.

This matter is in the earliest stages of proceedings. As a result, the Company cannot at this time determine the potential impact of the complaint on the consolidated financial position, cash flows, or results of operations of the Company. The Company believes that it has meritorious defenses with respect to this matter and intends to defend its position vigorously.

f. Other Matters

The Company is also subject to various other ordinary and routine claims and litigation arising in the normal course of business. In the opinion of management, all pending other legal matters are either adequately covered by insurance or, if not insured, will not have a material adverse impact on the consolidated financial position, cash flows, or the results of operations of the Company.

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12. Membership Interests

The Company’s membership interests are comprised of Class A and Class B membership interests. Holders of Class A membership interests are entitled to vote on any matter to be voted upon by the Members. Holders of Class B membership interests have all the economic interests in the Company and, except as provided by law, do not have any right to vote.

At and for the nine months ended September 30, 2014, Nevada Voteco holds 100% of the Company’s Class A membership interests and Nevada Mezz holds 100% of the Company’s Class B membership interests.

See Note 1 — Organization and Description of the Business — Company Overview — Sale or Transfer of Members’ Equity Interests for a discussion concerning the Company Sale.

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Disclosure Pursuant to Section 13(r) of the Exchange Act [Pending Deutsche Bank update]

Section 13(r) of the Exchange Act requires a public reporting issuer to disclose in its reports whether it or any of its affiliates has knowingly engaged in specified activities relating to Iran. The Company itself has nothing to report. However, Deutsche Bank AG may be viewed as our affiliate. Deutsche Bank AG has provided us the disclosure set forth below describing the ITRA-relevant activities of it and its affiliates for the quarter ended September 30, 2014. All references in this quoted disclosure to “we,” “us” and “our” are to Deutsche Bank AG and its affiliates. None of the disclosed activities or transactions was conducted by the Company.

“Disclosures Under Iran Threat Reduction and Syria Human Rights Act of 2012

Under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the U.S. Securities Exchange Act of 1934, as amended, an issuer of securities registered under the Securities Exchange Act of 1934 is required to disclose in its periodic reports filed under the Securities Exchange Act of 1934 certain of its activities and those of its affiliates relating to Iran and to other persons sanctioned by the U.S. under programs relating to terrorism and proliferation of weapons of mass destruction that occurred during the period covered by the report. We describe below a number of potentially disclosable activities of Deutsche Bank AG and its affiliates. Disclosure is generally required regardless of whether the activities, transactions or dealings were conducted in compliance with applicable law.

Legacy Financing Arrangements. Despite having ceased entering into new business in or with Iran in 2007, we continue to be engaged as lender, sponsoring bank and/or facility agent or arranger in several long-term financing agreements relating to the construction or acquisition of plant or equipment for the petroleum and petrochemical industries, under which Iranian entities were the direct or indirect borrowers. Before 2007, as part of banking consortia, we entered into a number of financing arrangements, four of which remained outstanding as of September 30, 2014, with the National Iranian Oil Company (NIOC), the National Petrochemical Company (NPC) and their respective group entities as borrowers. The latest final maturity under these loan facilities is in 2019. These loan facilities were guaranteed by national export credit agencies representing two European governments and one Asian national government. In principle, the obligations of the borrowers under these loan facilities are secured by assignments of receivables from oil and oil products exported by NIOC, NPC and/or their trading subsidiaries to buyers, mostly in Asia. These delivery obligations, however, were waived for the period covered by this report, due to the current sanctions environment. For some of these arrangements, we act as escrow agent, holding escrow accounts for the Iranian borrowers mentioned above, into which receivables are, in principle, paid by the buyers of the oil and oil products. During the period covered by this report, no such receivables were paid to the said escrow accounts. Such accounts are pledged in favor of the relevant banking consortium. We have no involvement in the contractual arrangements related to, or in the physical settlement of, the oil and oil product exports mentioned above. The Iranian entities in whose names the escrow accounts are held are not permitted to draw on these accounts, either because they are sanctioned parties or, where this is not the case, due to our business decision to not allow access to the accounts in light of the overall sanctions environment.

During the third quarter of 2014, approximately € 100 was paid into the escrow account. We, in our role as agent, distributed to the participants in the banking consortia € 1 million including portions attributable to us totaling approximately € 0.25 million.

We generated revenues in the third quarter of 2014 of approximately € 0.6 million in respect of these financing arrangements, of which approximately € 0.5 million consisted of escrow account revenues, € 27,000 consisted of loan interest revenues and € 9,000 consisted of fee revenues. The net profits were less than these amounts.

As of September 30, 2014, we have an undrawn commitment of approximately € 1.3 million under one of the financing agreements referred to above. Due to the export credit agency coverage, this remainder cannot be cancelled without German government approval, for which we have applied but have not yet received. We do not intend to make further disbursements upon this undrawn commitment.

Our portion of the remaining loan facilities amounted to approximately € 29 million as of September 30, 2014. We intend to continue pursuing repayment and fulfilling our administrative role under these agreements, but we do not intend to engage in any new extensions of credit to these or other Iranian entities.

Legacy Contractual Obligations Related to Guarantees and Letters of Credit. Prior to 2007, we provided guarantees to a number of Iranian entities. In almost all of these cases, we issued counter-indemnities in support of guarantees issued by Iranian banks because the Iranian beneficiaries of the guarantees required that they be backed directly by Iranian banks. In 2007, we made a decision to discontinue issuing new guarantees to Iranian or Iran-

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related beneficiaries. Although the pre-existing guarantees stipulate that they must be either extended or honored if we receive such a demand and we are legally not able to terminate these guarantees, we decided in 2011 to reject any “extend or pay” demands under such guarantees. Even though we exited, where possible, many of these guarantees, guarantees with an aggregate face amount of approximately € 7.6 million are still outstanding as of September 30, 2014. The gross revenues from this business were approximately € 11,000 and the net profit we derived from these activities was less than this amount.

We also have outstanding legacy guarantees in relation to a Syrian bank sanctioned by the U.S. under its non-proliferation program. The aggregate face amount of these legacy guarantees was approximately € 11.1 million, the gross revenues received from non-Syrian parties for these guarantees were approximately € 27,000 and the net profit we derived from these activities was less than this amount. The amount of legacy guarantees is higher than the amount reported in the last quarter (which was € 9.0 million) because a recent analysis identified additional legacy guarantees, dating from or before 2007, with regard to this Syrian bank booked in one of the Bank’s (non-German) European locations. We intend to exit these guarantee arrangements as soon as possible.

Payments Received. We received less than 30 payments adding up to approximately € 5.2 million in favor of non-Iranian clients in Germany, Belgium and the Netherlands, which payments stemmed ultimately from relevant Iranian entities. Revenues for these incoming payments were less than € 7,000. These figures include relevant payments in favor of clients of our subsidiary Postbank. We expect that we will also have to accept such transactions in the future.

Operations of Iranian Bank Branches and Subsidiaries in Germany. Several Iranian banks, including Bank Melli Iran, Bank Saderat and Europäisch-Iranische Handelsbank, have branches or offices in Germany, even though their funds and other economic resources are frozen under European law. As part of the payment clearing system in Germany, when these branches or offices need to make payments in Germany to cover their day-to-day operations such as rent, taxes, insurance premia and salaries for their remaining staff, or for any other kind of banking-related operations necessary to wind down their legacy trade business, the German Bundesbank accepts fund transfers from these Iranian banks and disburses them to the applicable (mainly German) payees, some of whom hold accounts with us. In the third quarter of 2014, we received approximately €1 million in such disbursements in approximately 200 transactions via the German Bundesbank in respect of payments from the above-mentioned Iranian banks, and the gross revenues derived from these payments were less than € 1,000. Relevant transactions of our subsidiary Postbank are included in these figures. We expect that we will also have to accept such transactions in the future.

Maintaining of Accounts for Iranian Consulates and Embassies. In the third quarter of 2014, Iranian embassies and consulates in Germany and the Netherlands were holding accounts with us as well as with Postbank. This includes the provision by a subsidiary of Postbank to the Iranian consulate of girocard (debitcard/ATM) terminals as well as the processing of transactions of cardholders using the terminals; the terminals are used to facilitate the payment of fees for the issuance of visas and other administrative measures by the consulate. The additional purpose of these accounts was the funding of day-to-day operational costs of the embassies and consulates, such as salaries, rent, and electricity. One of the account relationships was between Deutsche Bank Netherlands N.V. and the Agent Bureau of the Embassy of the Islamic Republic of Iran in The Hague (which is responsible for all Iran-U.S. Claims Tribunal activities). The total volume of outgoing payments from these accounts was approximately € 12 million in the third quarter of 2014, which payments were made with the involvement of the competent authorities in the relevant European countries under applicable law. We derived gross revenues of approximately € 14,000 and net profits which were less than this amount from these activities. The relevant European governments have requested that we continue to provide these services in the future to enable the Government of Iran to conduct its diplomatic relations.

Relationships with Corporate Clients. We maintain a business relationship with one corporate client registered in Germany who was sanctioned by the US in the first quarter of 2014 pursuant to Executive Order 13382. We did not terminate this relationship but imposed several restrictive measures to mitigate the relevant risks. In the third quarter of 2014 the revenues derived from this relationship were less than € 4,000 and the net profits were less than this amount. On October 16, 2014, the client’s name was removed from the U.S. Office of Foreign Asset Control’s Specially Designated Nationals List.

Activities of Entities in Which We Have Interests. Section 13(r) requires us to provide the specified disclosure with respect to ourselves and our “affiliates,” as defined in Exchange Act Rule 12b-2. Although we have minority equity

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interests in certain entities that could arguably result in these entities being deemed “affiliates,” we do not have the authority or the legal ability to acquire in every instance the information from these entities that would be necessary to determine whether they are engaged in any disclosable activities under Section 13(r). In some cases, legally independent entities are not permitted to disclose the details of their activities to us because of German privacy and data protection laws or the applicable banking laws and regulations. In such cases, voluntary disclosure of such details could violate such legal and/or regulatory requirements and subject the relevant entities to criminal prosecution or regulatory investigations.”

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

Any statements made in this report that are not statements of historical fact or that refer to estimated or anticipated future events are forward-looking statements. These statements may include, or be preceded or followed by, the words “may,” “will,” “should,” “might,” “could,” “potential,” “possible,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “hope” or similar expressions. We have based our forward-looking statements on management’s beliefs and assumptions based on information available to our management at the time these statements are made. Although we believe our expectations are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, our actual results may materially differ from expected results. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from our expectations include, but are not limited to: continuing recessionary economic and market conditions, particularly in levels of spending in the Las Vegas hotel, resort and casino industry; changes in the competitive environment in our industry; the seasonal nature of the hotel, resort and casino industry; the capital intensive nature of the Las Vegas hotel, resort and casino industry; costs associated with compliance with extensive regulatory requirements; diminishing value of our name, image and brand; maintaining the integrity of customer information; the loss of key members of our senior management; dependence on various third-party operators to provide key amenities; the outcome of pending or future legal proceedings; cyber security risk; our ability to collect gaming receivables from our credit players; and the other risks discussed in the sections entitled “Item 1A — Risk Factors” in our Annual Report on Form 10-K which was filed with the SEC on March 21, 2014 and in “Part II — Other Information — Item 1A — Risk Factors” of this Quarterly Report on Form 10-Q. In addition, new risks and uncertainties emerge from time to time, and it is not possible for us to predict or assess the impact of every factor that may cause our actual results to differ from those contained in any forward-looking statements. Undue reliance should not be placed on such statements, which speak only as of the date of this document or the date of any document that may be incorporated by reference into this document. Consequently, readers of this Quarterly Report on Form 10-Q should consider these forward-looking statements only as our current plans, estimates and beliefs. We do not undertake and specifically decline any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Among the forward-looking information set forth in this report is a discussion of the Purchase Agreement that we recently entered into. Risks, uncertainties and assumptions related to the Purchase Agreement include, but are not limited to: (1) the risk that the Company Sale may not close, (2) risks relating to the announcement of the transaction and (3) the risk of the effect of other strategic alternatives that may be pursued by Deutsche Bank if the Company Sale is not completed. We undertake no obligation to update or revise any forward-looking statements in this Quarterly Report on Form 10-Q or in our Annual Report on Form 10-K to reflect any new events or any change in conditions or circumstances.

Sale or Transfer of Members’ Equity Interests

On May 15, 2014, we reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission that Nevada Mezz, Deutsche Bank AG (“Deutsche Bank”) and the Company had entered into a Purchase Agreement (the “Purchase Agreement”) with BRE Spade Mezz 1 LLC, an affiliate of Blackstone Real Estate Partners VII L.P., for the sale of all of the Company’s Class B non-voting membership interests held by Nevada Mezz. The Purchase Agreement also provides for the transfer to BRE Spade Voteco LLC, a newly-formed affiliate of Blackstone Real Estate Partners VII L.P., of all of the Company’s Class A voting membership interests held by Nevada Voteco, together with the sale of Class B interests, the “Company Sale.” BRE Spade Mezz 1 LLC and BRE Spade Voteco LLC are collectively referred to as the “Purchaser” in this Quarterly Report on Form 10-Q.

Subject to potential net working capital adjustments, the all cash consideration for the membership interests totals approximately $1.73 billion. The Purchase Agreement was unanimously approved by the Company’s Board of Directors.

The consummation of the Company Sale is subject to the receipt of certain regulatory approvals, along with other customary closing conditions.

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Operations

Property Location

The Cosmopolitan comprises approximately 8.7 acres of land and is located on the Las Vegas Strip directly between MGM Resorts International’s Bellagio and City Center properties. The Cosmopolitan is connected to City Center to the south via an elevated pedestrian bridge and to the east side of the Las Vegas Strip via a second pedestrian bridge, and has ground floor public access from the Bellagio to the north. The Cosmopolitan opened its doors to the public at 8:00 p.m. Pacific Standard Time on December 15, 2010.

The Casino

The approximately 110,000 square feet casino features the latest in gaming technology offered in a modern, energetic atmosphere. At September 30, 2014, the casino floor included 1,359 slot machines and 123 table games, with immediate guest access from each of the East and West Towers and is accessible just steps from the Las Vegas Strip. The casino level also contains several destination bar/lounge areas, a three-story feature attraction using an innovative light and music display, as well as an intimate entertainment lounge used to bring live performances to the gaming floor. The casino also has two separate areas for high limit table games and slots, centrally located but distinct from the main gaming floor, catering specifically to our higher limit clientele.

The Hotel

As of the Phase I opening on December 15, 2010, the 50-story East and 52-story West Towers comprised 1,998 hotel and condominium hotel style rooms ranging in size from 730 square feet to over 5,400 square feet in addition to ten three-story bungalow-style suites adjacent to the west pool deck. The rooms feature contemporary bespoke room décor featuring spacious living areas, luxurious bathrooms, state-of-the-art technology control panels, flat-screen televisions, entertainment systems, wireless internet and a custom in-room bar. The condominium hotel style rooms offer expansive terraces with dazzling views of the Strip. Subsequent to the completion of Phase I, completion of Phase II resulted in additional hotel and condominium hotel style units located in the West Tower, bringing the total rooms available to approximately 2,960.

The top four floors of the East Tower and a restaurant space will be completed at a later date as management deems appropriate based on various factors, including market conditions.

Food and Beverage and the Restaurant Collection

The Cosmopolitan offers a number of casual dining options for our guests, including a premier buffet, a poolside grill, a casual restaurant on the casino level, a pizzeria, and in-room dining options available twenty-four hours a day, seven days a week. The Cosmopolitan also incorporates a number of bars, lounges, and destination venues which collectively feature a comprehensive cocktail and wine program, offering our guests a wide range of the finest in beverage options. In addition, The Cosmopolitan offers a collection of distinctive restaurants, managed and operated by experienced world class third-party restaurateurs. On December 30, 2013, we opened Rose. Rabbit. Lie., an innovative combination of restaurant, bar, club and live entertainment venue. Rose. Rabbit. Lie. encompasses 23,000 square feet.

Retail

Our retail offerings showcase nine eclectic retail boutiques on the second level of the podium in approximately 60,000 square feet of contiguous space. A sizeable amount of foot traffic naturally flows through our second floor retail space, as this is the primary pathway for Las Vegas visitors to travel north and south between City Center and Bellagio. Our retail operators were selected to fit with our overall brand image and profile, and offer our guests a range of accessible, distinctive retail options.

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Nightclub and Recreation Deck

The Cosmopolitan features an integrated entertainment venue of approximately 53,000 square feet including a cutting edge, world class nightclub operation called “Marquee Nightclub & Dayclub at The Cosmopolitan” (“Marquee”). The Marquee is approximately 31,000 square feet, and is located at the top of the podium between the two hotel towers. The Marquee encompasses all of the features of a major Las Vegas integrated resort nightclub, including two distinct ultra-lounge experiences and a Dayclub. The Dayclub operates from April through October, and was first opened in April 2011. It features 22,000 square feet of entertainment space including two pools, several bars, a gaming area comprised of nine table games, and grand cabanas with individual infinity pools.

Spa, Salon and Fitness Centers

Our integrated resort offers a 50,000 square feet spa and hammam facility, located at the base of the West Tower which is easily accessible from any room in The Cosmopolitan. Our spa and hammam is a key element in the overall offerings to our guests, and offers a level of quality, service and experience that we believe competes with the best spa offerings in the Las Vegas market.

Separately, the Property also offers two fitness centers, one in the East Tower and the other in the West Tower (including tennis courts), offering our guests twenty-four hours a day, seven days a week access to high quality fitness and exercise equipment.

Convention and Banquet Facility

Our approximately 185,000 square feet convention and banquet facility is located on the second, third and fourth levels of the podium. The space is designed for maximum flexibility, and can accommodate everything from small group meetings to large conferences. Directly beneath the hotel towers, the location of the ballroom space is unique to the Las Vegas market, allowing convention attendees immediate, direct access from the hotel towers to the meeting space. The space features full high speed Wi-Fi coverage, and support capabilities to enable all modern meeting technology requirements.

Event Center

On December 29, 2013, we opened The Chelsea, our 65,000 square feet, approximately 3,000-seat multi-use event center. This performance space and group venue is intended to encourage companies to book entertainment offerings, larger conventions, as well as product launches and other branding events.

21

Results of Operations

The following tables present selected historical financial data from the condensed consolidated statements of operations for the periods indicated. The historical results are not necessarily indicative of the results of operations to be expected in the future.

The Company’s operations are conducted entirely at the Property, which includes hotel, casino, food and beverage, retail and other related operations. As discussed above, the Company opened The Chelsea and Rose. Rabbit. Lie. during late-December 2013. Given the integrated nature of the Property’s operations, the Company is considered to have one operating segment.

	Three Months Ended September 30,
(Unaudited — In thousands)	2014			2013			$ Change			% Change
Net revenues	$	188,963		$	170,094		$	18,869			11.1	%
Operating expenses		203,473			190,044			13,429			7.1	%
Operating loss		(14,510	)		(19,950	)		(5,440	)		(27.3	%)
Other income (expense)		(9,179	)		(9,892	)		713			7.2	%
Loss before income taxes		(23,689	)		(29,842	)		(6,153	)		(20.6	%)
Income tax benefit		8,340			10,437			(2,097	)		(20.1	%)
Net loss		(15,349	)		(19,405	)		(4,056	)		(20.9	%)
	Nine Months Ended September 30,
(Unaudited — In thousands)	2014			2013			$ Change			% Change
Net revenues	$	571,939		$	500,803		$	71,136			14.2	%
Operating expenses		608,905			577,803			31,102			5.4	%
Operating loss		(36,966	)		(77,000	)		(40,034	)		(52.0	%)
Other income (expense)		(27,968	)		(29,952	)		1,984			6.6	%
Loss before income taxes		(64,934	)		(106,952	)		(42,018	)		(39.3	%)
Income tax benefit		23,305			37,608			(14,303	)		38.0	%
Net loss		(41,629	)		(69,344	)		(27,715	)		(40.0	%)

Operating Measures

Certain gaming and hospitality industry specific statistics are included in the discussion of our operating performance. These statistics are defined below:

• The table games hold percentage is the percentage of drop (amount of cash and markers issued; net markers paid at the gaming table with cash or chips) that is won by the Property and recorded as revenue.

• Average Daily Rate (“ADR”) is calculated by dividing total hotel revenue by total rooms occupied.

• Revenue per Available Room (“REVPAR”) is calculated by dividing total hotel revenue by total rooms available.

Our financial results are dependent upon the number of patrons that we attract to our Property and the amounts those guests spend per visit. Additionally, our operating results may be affected by, among other things, overall economic conditions impacting the disposable income of our guests, weather conditions affecting our Property, achieving and maintaining cost efficiencies, competitive factors, gaming tax increases and other regulatory changes, the commencement of new gaming operations, charges associated with debt refinancing, construction at our existing facility and general public sentiment regarding travel. We may experience significant fluctuations in our quarterly operating results due to seasonality, variations in gaming hold percentages and other factors. Consequently, our operating results for any quarter or fiscal year are not necessarily comparable and may not be indicative of future periods’ results.

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Three Months Ended September 30, 2014 Compared to the Three Months Ended September 30, 2013

Revenues

As compared to the three months ended September 30, 2013, our gross and net revenues for the three months ended September 30, 2014 increased by 15.0% and 11.1%, respectively, representing incremental gross and net revenue dollar increases of $30.2 million and $18.9 million, respectively.

Our revenues for the applicable periods were as follows:

	Three Months Ended September 30,
(Unaudited — In thousands)	2014			2013			$ Change			% Change
Revenues:
Casino	$	55,567		$	44,374		$	11,193			25.2	%
Hotel		80,346			66,902			13,444			20.1	%
Food and beverage		83,480			81,312			2,168			2.7	%
Entertainment, retail and other		12,200			8,816			3,384			38.4	%
Gross revenues		231,593			201,404			30,189			15.0	%
Less — promotional allowances		(42,630	)		(31,310	)		(11,320	)		36.2	%
Net revenues	$	188,963		$	170,094		$	18,869			11.1	%

Our casino revenues consist of table games and slots. For the comparable 2014 and 2013 reporting periods, our casino revenues increased by 25.2% as compared to the three months ended September 30, 2013. The table games hold percentage for the three months ended September 30, 2014 was 16.9% (our expected range is 10.0% to 14.0%), an increase from 16.1% for the three months ended September 30, 2013. Our focus continues to be on supplementing the level of table game play at the Property, from both domestic and international customers. We also continue to focus our efforts on increasing the volume of slot play through leveraging our unique Identity Membership Program (“Identity”), building our database of slot customers, expanding our alliance program and continuing to introduce a variety of slot promotions including the Million Dollar Slot Series tournaments which began during July 2014.

For the three months ended September 30, 2014, hotel revenues grew 20.1% compared to the third quarter of 2013. ADR and occupancy for the three months ended September 30, 2014 were $306 and 96.3%, respectively, generating REVPAR of $294. ADR and occupancy for the three months ended September 30, 2013 were $268 and 91.5%, respectively, generating REVPAR of $245. The increase in ADR and REVPAR when compared to the same 2013 period primarily reflects the direct and indirect effects of strong demand in the group and convention categories. We also experienced growth in free independent travelers. Lastly, the January 1, 2013 resort fee implementation continues to positively contribute to hotel revenues as our group business grows. The 2014 higher occupancy levels primarily reflect increased room bookings from Identity patrons, as well as continuing growth in our group room nights associated with the late-December 2013 opening of The Chelsea.

Food and beverage revenues for the three months ended September 30, 2014 increased $2.2 million or 2.7%, when compared to the same period in 2013. Food and beverage revenues generated from restaurants, banquets and conventions, in-room dining and bars include revenues from all Company-operated outlets, as well as the third-party operated food and beverage outlets which are wholly-owned by the Company. We continue to experience food and beverage revenue growth from the Company-operated and third-party operated dining establishments due to (i) strong growth in our group and convention business which directly contributes to higher revenues generated from banquet and buffet services; (ii) the high volume of customers visiting our restaurants; (iii) the increased number of customers visiting and or staying at our Property; and, (iv) the late-December 2013 opening of Rose. Rabbit. Lie., a 23,000 square feet social club representing an innovative combination of restaurant, bar, club and live entertainment.

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Entertainment, retail and other revenues are generated from the Property’s spa and salon, retail outlets, concerts, boxing events, group cancellations fees, and other miscellaneous activities. Entertainment, retail and other revenues for the three months ended September 30, 2014 and 2013 were $12.2 million and $8.8 million, respectively, representing an increase of $3.4 million or 38.4%. The quarter-over-quarter increase in entertainment, retail and other revenues primarily reflects higher revenues generated from an increased number of entertainment events and higher revenue from retail, spa services and various fees. As previously announced, we completed the build-out and opened our planned 65,000 square feet, approximately 3,000-seat multi-use event center, The Chelsea during late-December 2013.

Revenues for the 2014 and 2013 operating quarterly periods include the retail value of accommodations, food and beverage, and other services furnished to our guests without charge. In accordance with industry practice, these promotional allowances or complimentaries (“comps”) are deducted from revenues. While quarter-over-quarter gross revenues increased by 15.0% for the 2014 and 2013 operating periods, promotional allowances as a percentage of gross revenues, increased from 15.5% to 18.4% between the respective quarterly periods. We believe the level of promotional allowances or comps incurred for the respective 2014 and 2013 periods were necessary to continue to drive customer awareness, build our customer database and create customer loyalty. For the three months ended September 30, 2014, this increase is also due to targeted direct marketing efforts which resulted in higher casino player room comps. We expect this level of promotional allowance or comps expense to vary period-over-period.

Operating Expenses

Our operating expenses increased 7.1%, notably below the 15.0% increase in our gross revenues, for the three months ended September 30, 2014 as compared to the three months ended September 30, 2013. The increase in overall operating expenses is partially reflective of (i) the growth in gross revenues for the three months ended September 30, 2014 over the comparable 2013 period; as well as, (ii) an increase in corporate operating expenses for certain incentive and retention plan amounts related to the Company Sale. Our ongoing efforts are focused on restraining the growth, and in some cases, reducing department operating expenses, resulting in higher operating margins.

	Three Months Ended September 30,
(Unaudited — In thousands)	2014		2013		$ Change			% Change
Operating expenses:
Casino	$	34,145	$	28,582	$	5,563			19.5	%
Hotel		8,602		9,921		(1,319	)		(13.3	%)
Food and beverage		54,599		54,567		32			0.1	%
Entertainment, retail and other		11,424		8,203		3,221			39.3	%
Sales and marketing		12,620		11,445		1,175			10.3	%
General and administrative		27,620		29,568		(1,948	)		(6.6	%)
Corporate		12,787		3,193		9,594			N/A
Pre-opening		—		1,727		(1,727	)		N/A
Loss on disposal of assets		2		79		(77	)		(97.5	%)
Asset impairment		—		—		—			N/A
Depreciation and amortization		41,674		42,759		(1,085	)		(2.5	%)
Total operating expenses	$	203,473	$	190,044	$	13,429			7.1	%

Departmental Operating Expenses

Departmental operating expenses include operations associated with casino, hotel, food and beverage, entertainment, retail and other. During the three months ended September 30, 2014, departmental expenses cumulatively increased by $7.5 million or 7.4% over the respective 2013 period. In general, the increase in departmental operating expenses reflects higher incremental expenses generated from our period-over-period revenue growth, e.g., casino player comps, departmental labor and hotel linen replacement.

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The increase in casino operating expenses for the 2014 quarterly reporting period primarily reflects higher room occupancies and other operating departmental usage by our Identity members, food and beverage and other costs associated with comps offered to our customers, as well as higher commissions for independent representatives generated from the Property’s expanded domestic and international host program.

In general for prior periods, hotel operating costs have trended as a function of the occupancy level and related servicing of our rooms. However, in comparing the three months ended September 30, 2013 to the three months ended September 30, 2014, hotel operating expenses decreased by $1.3 million. Additionally, for the three months ended September 30, 2014 the occupancy levels increased to 96.3% from the respective 2013 occupancy level of 91.5%. This is primarily reflective of higher volume of room occupancy by our Identity members with these related costs included as a charge to the casino operating expenses which contributed to the decrease in hotel operating expenses.

Food and beverage operating expenses for the three months ended September 30, 2014 remained flat with the respective 2013 period, reflecting management’s efforts to control costs despite the revenue increases.

The $3.2 million increase in 2014 quarterly period’s operating expenses within our entertainment, retail and other departments primarily reflects the inclusion in 2014 of our multi-use event center, The Chelsea, and our expanded entertainment calendar. Costs may fluctuate between periods as a result of the number of shows and the underlying cost for each show. The third quarter of 2014 reflects more shows than the comparable prior year quarter, driving the expense increase. Entertainment is a key component of the overall marketing and position strategy of the Property, and is an important driver of visitation to the Property.

Sales and Marketing, General and Administrative and Corporate Expenses

For the comparative 2014 to 2013 periods, the $1.2 million increase in sales and marketing primarily reflects differences in the period-to-period timing for the placement of our advertising and comparative spending levels. Marketing and advertising spending enhances our strong brand identity, helping to drive traffic to our Property.

General and administrative expenses for the 2014 quarterly period, as compared to the same period in 2013, decreased by $1.9 million or 6.6%, reflecting our continuing efforts to control expenses. General and administrative expenses include salaries, property taxes and insurance.

Corporate expenses, which generally include corporate salaries and legal expenses, increased by $9.6 million for the three months ended September 30, 2014 as compared to the same 2013 period. In the quarter ended September 30, 2014, the Company recognized approximately $7.6 million in expense related to The Cosmopolitan of Las Vegas Incentive Award Plan, The Cosmopolitan of Las Vegas Management Exit Award Plan and The Cosmopolitan of Las Vegas Retention Bonus Plan associated with the signing of the Purchase Agreement, as noted earlier. Additional amounts of up to $5.6 million could be payable under the agreements upon closing of the Company Sale, and are expected to be accrued in the fourth quarter, 2014.

Pre-opening Expenses

Costs incurred during a development and construction period that are not related to development and construction are included within pre-opening expenses. Such costs include, but are not limited to, direct marketing and advertising of the project prior to opening, consultants hired to assist the Company in the opening of a project, training of new CoStars, payroll for specific CoStars in our non-development and construction groups specifically assigned to the project, the cost of incremental office lease space associated with the project and used by the Company prior to opening, legal and other consulting fees, general and administrative expenses and other non-construction-related expenses.

No pre-opening expenses were incurred during the three months ended September 30, 2014. Pre-opening expenses of $1.7 million for the three months ended September 30, 2013 reflect such costs related to The Chelsea and Rose. Rabbit. Lie., which both opened in late-December 2013.

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Depreciation and Amortization Expenses

Depreciation and amortization charges were $41.7 million for the three months ended September 30, 2014 and $42.8 million for the comparable 2013 quarterly period. For the three months ended September 30, 2014, the decrease in depreciation expense reflected the placing into service of the capital assets associated with The Chelsea and Rose. Rabbit. Lie., offset by the effect of fully depreciating various non-idle capital assets during 2013.

Other Income (Expense)

Other income and expense for the three months ended September 30, 2014 and 2013 were as follows:

	Three Months Ended September 30,
(Unaudited — In thousands)	2014			2013			$ Change			% Change
Other income (expense):
Interest and other income		8			11			(3	)		(26.1	%)
Interest expense due to affiliate, net of amounts capitalized		(9,187	)		(9,903	)		716			7.2	%
Total other income (expense)	$	(9,179	)	$	(9,892	)	$	713			7.2	%

Interest Expense Due to Affiliate, Net of Amounts Capitalized

The Company had weighted average borrowings of $3.5 billion for each of the respective quarterly periods ended September 30, 2014 and 2013. At September 30, 2014 and 2013, the stated interest rates for these respective periods were each approximately 1.1%.

Income Taxes

For the quarters ended September 30, 2014 and 2013, our income tax benefit was $8.3 million and $10.4 million, respectively. Effective January 1, 2012, pursuant to a broader tax reorganization, the Company is part of a Corporate Consolidated Tax Group (the “U.S. Consolidated Group”) owned by a subsidiary of Deutsche Bank. The U.S. Consolidated Group is expected to generate more than sufficient taxable income annually to utilize the Company’s net operating losses and realize the Company’s deferred tax assets.

Our effective income tax rates of (35.2%) and (35.0%) for each of the respective three months ended September 30, 2014 and 2013, includes the statutory tax rate benefit for being a party to the U.S. Consolidated Group tax sharing agreement.

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Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013

Revenues

Gross revenues for the nine months ended September 30, 2014 increased $98.4 million or 16.7%, when compared to the same period in 2013. For the comparable nine month periods, net revenues increased $71.1 million or 14.2%. Our revenues for the nine months ended September 30, 2014 and 2013 were as follows:

	Nine Months Ended September 30,
(Unaudited — In thousands)	2014			2013			$ Change			% Change
Revenues:
Casino	$	156,067		$	115,895		$	40,172			34.7	%
Hotel		236,886			201,900			34,986			17.3	%
Food and beverage		264,159			246,038			18,121			7.4	%
Entertainment, retail and other		30,784			25,647			5,137			20.0	%
Gross revenues		687,896			589,480			98,416			16.7	%
Less — promotional allowances		(115,957	)		(88,677	)		(27,280	)		30.8	%
Net revenues	$	571,939		$	500,803		$	71,136			14.2	%

Our casino revenues increased 34.7% compared to the nine months ended September 30, 2013. The table games hold percentage for the nine months ended September 30, 2014 was 15.6% (our expected range is 10.0% to 14.0%), up from 13.2% for the nine months ended September 30, 2013, complementing growth in our slot revenues.

For the nine months ended September 30, 2014, hotel revenues, ADR and REVPAR increased over the same period in 2013, primarily reflecting continued strong demand in the free independent traveler and group sales categories, as well as the Company’s January 1, 2013 resort fee implementation. ADR and occupancy for the nine months ended September 30, 2014 were $308 and 95.0%, respectively, generating REVPAR of $293. ADR and occupancy for the nine months ended September 30, 2013 were $274 and 91.0%, respectively, generating REVPAR of $250. The 2014 higher occupancy levels primarily reflect increased room bookings from Identity patrons, as well as continuing growth in our group room nights associated with the late-December 2013 opening of The Chelsea.

Food and beverage revenues for the nine months ended September 30, 2014 increased $18.1 million or 7.4%, when compared to the same period in 2013. Revenue growth for the nine months ended September 30, 2014 is primarily attributable to the high volume of customers staying and visiting our Property directly contributing to higher revenues generated from restaurant, banquet and buffet services. In addition, during late-December 2013, we also opened Rose. Rabbit. Lie., an innovative combination of restaurant, bar, club and live entertainment.

Entertainment, retail and other revenues for the nine months ended September 30, 2014 and 2013 were $30.8 million and $25.7 million, respectively, representing an increase of $5.1 million or 20.0%. The period-over-period increase in entertainment and other revenues primarily reflects higher revenues generated from an increased number of The Chelsea entertainment events and higher revenue from retail, spa services and various fees. We expect continued revenue growth from The Chelsea during the remainder of 2014.

Revenues for the nine months ended September 30, 2014 and 2013 include the retail value of accommodations, food and beverage, and other services furnished to our guests without charge. In accordance with industry practice, these promotional allowances or comps are deducted from revenues. While gross revenues increased by 16.7% for the comparable nine month periods, promotional allowances as a percentage of gross revenues increased from 15.0% to 16.9% for the same comparable nine month periods. We believe the level of promotional allowances or comps incurred for the respective 2014 and 2013 periods were necessary to continue to drive customer awareness, build our customer database and create customer loyalty. We expect this level of promotional allowance or comps expense to vary period-over-period.

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Operating Expenses

Our operating expenses increased 5.4% for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013, lower than the growth in gross revenues of 16.7% and net revenues growth of 14.2% for the same operating period. The Company has ongoing efforts focused on restraining the growth, and in some cases, reducing departmental operating expenses, resulting in higher operating margins.

	Nine Months Ended September 30,
(Unaudited — In thousands)	2014		2013		$ Change			% Change
Operating expenses:
Casino	$	96,644	$	83,973	$	12,671			15.1	%
Hotel		27,151		30,279		(3,128	)		(10.3	%)
Food and beverage		174,102		162,520		11,582			7.1	%
Entertainment, retail and other		29,826		22,263		7,563			34.0	%
Sales and marketing		50,102		49,383		719			1.5	%
General and administrative		79,278		80,466		(1,188	)		(1.5	%)
Corporate		24,563		13,856		10,707			77.3	%
Pre-opening		—		2,172		(2,172	)		N/A
Loss on disposal of assets		117		85		32			38.0	%
Asset impairment		1,506		—		1,506			N/A
Depreciation and amortization		125,616		132,806		(7,190	)		(5.4	%)
Total operating expenses	$	608,905	$	577,803	$	31,102			5.4	%

Departmental Operating Expenses

During the nine months ended September 30, 2014, departmental operating expenses consisting of operations associated with casino, hotel, food and beverage, entertainment, retail and other, increased by $28.7 million or 9.6% over the respective 2013 period. In general, the increase in departmental operating expenses is reflective of higher incremental expenses generated from our period-over-period revenue growth. The increase in casino operating expenses for the nine months ended September 30, 2014 includes higher commissions for independent representatives generated from our expanded host program, as well as continuing refinement of hotel, food and beverage and other costs associated with complimentary goods and services offered to our customers. Per their respective agreements, we also incurred higher management and incentive fees owed to partner restaurants for performing at higher profitability levels.

Sales and Marketing, General and Administrative and Corporate Expenses

For the nine months ended September 30, 2014, the $0.7 million increase in sales and marketing primarily reflects the timing and variability of spending in certain national target markets. The 1.5% decrease in general and administrative expenses for the nine months ended September 30, 2014 as compared to the same 2013 period is attributable to the Company’s previously disclosed efforts to control these costs in conjunction with operating revenue growth. For the nine months ended September 30, 2014, related to the Company Sale, the Company recognized approximately $12.7 million in corporate expense from The Cosmopolitan of Las Vegas Incentive Award Plan, The Cosmopolitan of Las Vegas Management Exit Award Plan and The Cosmopolitan of Las Vegas Retention Bonus Plan. Additional amounts of up to $5.6 million could be payable under the agreements upon closing of the Company Sale, and are expected to be accrued in the fourth quarter, 2014. Included in corporate expenses for the nine month, 2013 period is the $3.0 million recognition of a loss contingency as an estimate of what we believe may be the eventual and reasonably possible loss associated with certain legal cases.

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Pre-opening Expenses

No pre-opening expenses were incurred during the nine months ended September 30, 2014. Pre-opening expenses of $2.2 million for the nine months ended September 30, 2013 reflects costs related to the late-December 2013 opening of The Chelsea.

Asset Impairment

In July 2014, the Company announced the closure of the Vegas Nocturne show at Rose. Rabbit. Lie. As a result, for the three and six months ended June 30, 2014, the Company determined that certain long-lived assets related specifically to the show may be impaired. Accordingly, the Company estimated the undiscounted future cash flows to be generated from the identified long-lived assets over their remaining useful life to continue to be negative, resulting in a $1.5 million write-down of the identified assets, which is reported as an asset impairment in the Company’s condensed consolidated statements of operations during the nine months ended September 30, 2014. No potential impairment charges were identified or recorded by the Company during the prior year periods.

Depreciation and Amortization Expenses

Depreciation and amortization charges were $125.6 million for the nine months ended September 30, 2014 and $132.8 million for the nine months ended September 30, 2013. As previously discussed, for the nine months ended September 30, 2014, the decrease in depreciation expense is due to the effect of fully depreciating various non-idle capital assets during 2013. The decrease is partially offset by additional depreciation from capital assets associated with The Chelsea and Rose. Rabbit. Lie., which were placed into service in late 2013.

Other Income (Expense)

Other income and expenses for the nine months ended September 30, 2014 and 2013 were as follows:

	Nine Months Ended September 30,
(Unaudited — In thousands)	2014			2013			$ Change		% Change
Other income (expense):
Net settlement and default income	$	245		$	217		$	28		12.7	%
Interest and other income		38			28			10		35.9	%
Interest expense due to affiliate, net of amounts capitalized		(28,251	)		(30,197	)		1,946		(6.4	%)
Total other income (expense)	$	(27,968	)	$	(29,952	)	$	1,984		6.6	%

Net Settlement and Default Income

Through the nine months ended September 30, 2014 and 2013, certain purchasers of condominium hotel units located within the East and West Towers of the Property agreed to settle and release their claims against the Company. No condominium hotel units remain under contract for sale at September 30, 2014.

Interest Expense Due to Affiliate, Net of Amounts Capitalized

The Company had weighted average borrowings of $3.5 billion at September 30, 2014 and 2013. For the nine months ended September 30, 2014 and 2013, the weighted average interest rate was approximately 1.1% for each respective period.

29

Income Taxes

For the nine months ended September 30, 2014 and 2013, our income tax benefit was $23.3 million and $37.6 million, respectively. Our effective income tax rate was (35.9%) and (35.2%) for the nine months ended September 30, 2014 and 2013, respectively. Effective January 1, 2012, the Company is part of a Consolidated Group owned by a subsidiary of Deutsche Bank and is party to a tax sharing agreement with the Consolidated Group. The effective income tax rate for the nine months ended September 30, 2013 includes the benefit for being a party to such tax sharing agreement. The Consolidated Group is expected to generate more than sufficient taxable income annually to utilize the Company’s deferred tax assets.

Non-U.S. GAAP Measures — EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are used by management as the primary measures of operating performance of The Cosmopolitan. Adjusted EBITDA is calculated as the net income (loss) attributable to the Company before interest, income taxes, depreciation and amortization, pre-opening expenses, loss from asset impairment, rent expenses and corporate expenses.

The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP. Management has presented EBITDA and Adjusted EBITDA information as supplemental disclosures to the reported U.S. GAAP measures because it believes that these measures are widely used to assess the operating performance in the gaming and hospitality industry. Certain items excluded from EBITDA and Adjusted EBITDA may be recurring in nature and should not be disregarded in the evaluation of our earnings performance. However, management believes that the exclusion of such items provides a meaningful analysis of current results and trends as these items can vary significantly depending on specific underlying transactions or events that are not comparable between the periods being presented.

EBITDA and Adjusted EBITDA should not be construed as alternatives to operating income or net income, as indicators of our performance, as alternatives to cash flows from operating activities, as measures of liquidity, or as any other measures determined in accordance with U.S. GAAP. Also, other companies in the gaming and hospitality industries that report EBITDA and Adjusted EBITDA information may calculate EBITDA and Adjusted EBITDA in a different manner.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net loss for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,						Nine Months Ended September 30,
(Unaudited — In thousands)	2014			2013			2014			2013
Net loss	$	(15,349	)	$	(19,405	)	$	(41,629	)	$	(69,344	)
Interest, net		9,179			9,892			28,213			30,169
Income tax benefit		(8,340	)		(10,437	)		(23,305	)		(37,608	)
Depreciation and amortization		41,674			42,759			125,616			132,806
EBITDA		27,164			22,809			88,895			56,023
Corporate expenses		12,787			3,193			24,563			13,856
Pre-opening expenses		—			1,727			—			2,172
Asset impairment		—			—			1,506			—
Rent expenses		472			460			1,391			1,050
Adjusted EBITDA	$	40,423		$	28,189		$	116,355		$	73,101

30

Liquidity and Capital Resources

Our ongoing liquidity will depend on a number of factors, including available cash resources, cash flow from operations, funding of capital projects and our compliance with certain non-financial covenants contained in the Credit Facility.

	Nine Months Ended September 30,
(Unaudited — In thousands)	2014			2013
Net cash provided by operating activities	$	138,470		$	128,137
Net cash used in investing activities		(32,584	)		(49,440	)
Net cash used in financing activities		(71,823	)		(60,478	)

As of September 30, 2014, we had $92.7 million in available cash and cash equivalents.

Cash Flows — Operating Activities

Net cash provided by operating activities during the nine months ended September 30, 2014 and 2013 includes $56.4 million and $83.1 million, respectively, of U.S. Consolidated Group reimbursements for the utilization of the Company’s prior period net operating losses. For the nine months ended September 30, 2014, the net cash provided by operating activities was also primarily impacted by the timing of payments for certain significant prepaid expenses and accrued liabilities, including insurance, property taxes and contractual concert fees.

For the nine months ended September 30, 2013, the net cash provided by operating activities was also impacted by timing of prepaid expenses and accrued expenses and by the purchase of higher liquor inventories to take advantage of pricing efficiencies.

Cash Flows — Investing Activities

The ordinary and major capital expenditures of $32.6 million incurred during the nine months ended September 30, 2014 are primarily related to (i) retention and construction payments for certain significant new components of our integrated resort, The Chelsea and Rose. Rabbit. Lie. (our new venues which opened in late-December 2013); and (ii) ordinary capital expenditures.

For the nine months ended September 30, 2013, major capital expenditures incurred of $37.2 million were primarily related to construction of certain components of our integrated resort, including The Chelsea.

In addition to direct costs of construction included in construction in progress and ordinary capital expenditures (as applicable) are soft or indirect costs. These soft costs are generally incurred prior to commencement of the project construction and can include permits, architectural fees, engineering fees, real estate commissions and fees, marketing, taxes, insurance, interest payments, leasing and general administrative costs, etc. For the nine months ended September 30, 2014 and 2013, we capitalized related soft costs in the amount of $1.2 million and $7.3 million, respectively.

Cash Flows — Financing Activities

The Company maintains a $3.9 billion Credit Facility with DBCI, $3.4 billion of which was outstanding as of September 30, 2014. Deutsche Bank has no obligation to provide the Company with additional funding beyond the Credit Facility. Amounts under the total Credit Facility are drawn down in tranches which have varying maturity dates and are automatically renewed upon their expiration at the prevailing interest rates. Borrowings carry an interest rate of LIBOR plus a margin of 85 basis points (0.85%). The Credit Facility does not include any financial covenants. The current expiration of the Credit Facility is December 2015. See further discussion below in the Liquidity and Capital Resources section regarding the Purchase Agreement for the Company Sale and the potential effect on the Company’s Credit Facility.

31

For the nine months ended September 30, 2014, the net cash used in financing activities of $71.8 million includes $9.8 million in borrowings against our Credit Facility which was offset by related principal repayments totaling $81.6 million. Our draws against the Credit Facility were primarily utilized for construction costs relating to The Chelsea and Rose. Rabbit. Lie., and to a lesser degree, to finance the operations at the Property.

For the nine months ended September 30, 2013, the net cash used in financing activities balance of $60.5 million includes $37.6 million in borrowings against our Credit Facility which was offset by related principal repayments totaling $98.1 million.

Liquidity and Capital Resources

Our integrated resort will have an ongoing need for renovations and other capital improvements to remain competitive, including replacement, from time to time, of furniture, fixtures and equipment. Certain capital expenditure requirements may be necessary to comply with any changes in applicable laws and regulations. We estimate capital expenditures will approximate $40 million for the full year, 2014.

Under the terms of our Credit Facility, proceeds from the Credit Facility may be used to pay for (i) the costs of constructing and completing the Property; (ii) Property operating deficits; and, (iii) payment of interest on the loan to the extent that cash flow from the Property is insufficient to pay such interest after paying the cost of operating the Property. As discussed in Note 1 — Organization and Description of Business — Company Overview — Sale or Transfer of Members’ Equity Interests, on May 15, 2014, the Company entered into the Purchase Agreement for the Company Sale. The Purchase Agreement provides that on or prior to the closing of the Purchase Agreement, Deutsche Bank AG or its applicable affiliate will release and discharge the Company from any further obligations under the Credit Facility, such that the Company no longer has any obligations under the Credit Facility.

All outstanding debt becomes due and payable upon a change of control of the Company. As such, with the final execution and closing of the Company Sale, the Company may need to seek other financing sources to support any working capital requirements and/or future growth. However, due to the existing uncertainty in the capital and credit markets, access to capital may not be available on terms acceptable to us or at all. The cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Continued turbulence in the U.S. and international markets and economies and prolonged declines in business and consumer spending may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to refinance maturing liabilities, as applicable, and access to capital markets to meet liquidity needs.

The Company classifies construction-related accounts payable, retention and accrued and other liabilities as long-term liabilities as they are financed by the Credit Facility, and therefore, will not require the use of working capital. At September 30, 2014, these construction-related costs totaled $1.8 million.

Short-Term Liquidity Requirements

We generally consider our short-term liquidity requirements to consist of those items that are expected to be incurred or come due within the next twelve months. We believe those requirements consist primarily of funds necessary to pay construction payables and retention related to the build-out of The Chelsea and Rose. Rabbit. Lie., normal on-going capital expenditures, interest payments, and on-going working capital requirements. We believe that borrowings under the existing Credit Facility and operating cash flows generated by the Property will be sufficient to meet our short-term liquidity requirements. Within the next twelve months, short-term liquidity requirements are estimated to be approximately $140.0 million to $150.0 million.

Long-Term Liquidity Requirements

We generally consider our long-term liquidity requirements to consist of those items that are expected to be incurred beyond the next twelve months and believe these requirements consist primarily of funds necessary to finance future capital and renovation projects and to finance ongoing operational costs. We intend to satisfy our long-term liquidity requirements through borrowings under the existing Credit Facility and operating cash flows generated by the Property.

32

The Credit Facility debt structure described above will require the Company to generate sufficient cash flows to pay the current interest due on the outstanding borrowings on a quarterly basis. Since interest rates will reset quarterly based on the value of LIBOR at the reset date, the Company will have a variable interest obligation that may cause volatility in our cash flows. The interest rate structure described above does not include a credit risk premium in the spread over the base rate. The lack of a risk premium in the interest rate reflects the fact that the Company is a wholly-owned subsidiary of Deutsche Bank. This interest rate is not representative of third-party interest rates that the Property would have to ordinarily bear if funding were obtained from an unrelated party. Upon a change of control event, we expect that the Company will be required to pay a credit risk premium to any lender that provides financing. In addition, base interest rates are at historic low levels and interest rates will likely increase over time.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments about the effects of matters that are inherently uncertain. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. The critical accounting policies are summarized in Note 2 to our consolidated financial statements included in Item 8 — Financial Statements and Supplementary Data in our 2013 Annual Report on Form 10-K filed on March 21, 2014.

Newly Issued Accounting Pronouncements

Refer to related disclosure within Note 2 — Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Principles to our condensed consolidated financial statements included in Item 1 — Notes to Condensed Consolidated Financial Statements (unaudited) in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. The outstanding debt under our Credit Facility has a variable interest rate. As of September 30, 2014, an increase in market rates of interest by 1.0% would have increased our annual interest cost by approximately $34.4 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) and Rule 15d-15(b) of the Exchange Act, our management, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act. As of September 30, 2014, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

33

Changes in Internal Controls

There have not been any changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

34

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

See Note 11 — Commitments, Contingencies and Litigation to our condensed consolidated financial statements included in Item 1 — Notes to Condensed Consolidated Financial Statements (unaudited) in this Quarterly Report on Form 10-Q for a description of our significant current legal proceedings.

Item 1A. Risk Factors

In addition to the other information contained in this Quarterly Report on Form 10-Q, you should carefully consider other risk factors discussed in Item 1A — Risk Factors in our Annual Report on Form 10-K which was filed with the SEC on March 21, 2014, in evaluating our business, financial position, future results, and prospects. Although there have been no material changes to the risk factors described in the Annual Report on Form 10-K, the risks described therein are not the only risks facing our Company. Additional risks that we do not presently know or that we currently believe are not material could also materially adversely affect our business, financial position, future results and prospects.

The consummation of the Company Sale pursuant to the Purchase Agreement we entered into on May 15, 2014 is subject to conditions, including receipt of certain regulatory approvals, including, gaming licensing approvals, which are outside of our control.

On May 15, 2014, we entered into a Purchase Agreement relating to the Company Sale. The respective obligations of the parties to the Purchase Agreement to consummate the Company Sale are subject to the receipt of certain regulatory approvals, along with the satisfaction or waiver of certain other customary closing conditions.

We cannot predict whether and when these conditions will be satisfied and, as such, there is no assurance that the sale contemplated by the Purchase Agreement will be consummated.

Whether or not the Company Sale is consummated, the announcement of the Company Sale may have an adverse effect on the Company’s business relationships, operating results and business generally.

Whether or not the Company Sale is consummated, our business may be harmed because:

• management’s and our employees’ attention may be diverted from our day-to-day business because matters related to the Company Sale may require additional commitments of their time and resources;

• employees may perceive uncertainty about their future roles with us, which might adversely affect our ability to retain and hire key personnel and other employees;

• our relationships with customers, partners, including Marriott International, Inc. (“Marriott”), and suppliers may be adversely affected as a result of uncertainties regarding the Purchaser’s plans with respect to our products, employees and business;

• certain relationships with customers, partners, including Marriott, and suppliers may give rise to certain “change of control” or other contractual termination rights, which such party and/or the Company could elect to exercise in the event of a sale;

• we have agreed to restrict certain of our activities (unless we obtain Purchaser consent) pending the consummation of the Company Sale; and

• we have incurred, and will continue to incur, certain costs, expenses and fees for professional services and other transaction costs in connection with the Company Sale, which costs, expenses and fees are payable by us whether or not the sale is consummated.

35

If the Company Sale is not completed, Deutsche Bank is likely to consider other strategic alternatives to divest ownership of the Company that are subject to risks and uncertainties.

If the Company Sale is not completed, we would anticipate that Deutsche Bank would continue to review and consider various alternatives available to them to divest ownership of the Company, including among others, attempting to implement a sale to a financial or strategic buyer. These alternative transactions may involve various additional risks to our business, including among others, distraction of our management team and associated expenses, our ability to consummate any such alternative transaction and other variables which may adversely affect our operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities by the Company.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On November 7, 2014, the Company entered into amendments to the three-year employment agreements with Lisa Marchese, the Company’s Chief Marketing Officer, and Thomas McCartney, the Company’s Chief Operating Officer, pursuant to which such employment agreements were extended for a period of ninety days. Ms. Marchese’s employment agreement, which was scheduled to terminate on January 2, 2015, will now terminate on April 3, 2015. Mr. McCartney’s employment agreement, which was scheduled to terminate on December 31, 2014, will now terminate on April 1, 2015. No other terms of these employment agreements were amended.

36

Item 6. Exhibits

Exhibit
10.4*†	First Letter Amendment to Employment Agreement, dated November 7, 2014, between Nevada Property 1 LLC and Thomas J. McCartney
10.5*†	First Letter Amendment to Employment Agreement, dated November 7, 2014, between Nevada Property 1 LLC and Lisa Marchese
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 7, 2014 formatted in Extensible Business Reporting Language (XBRL):
	i.       the condensed consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013;
	ii.      the condensed consolidated balance sheets as of September 30, 2014 and December 31, 2013;
	iii.    the condensed consolidated statements of cash flows for the nine months ended September 30, 2014 and 2013; and
	iv.     the notes to condensed consolidated financial statements.

* Filed herewith.

† Indicates management contract as compensatory plan.

37

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

NEVADA PROPERTY 1 LLC

Registrant

/S/ JOHN UNWIN

John Unwin

Chief Executive Officer

(Principal Executive Officer)

Date: November 7, 2014

/S/ RONALD G. EIDELL

Ronald G. Eidell

Chief Financial Officer

(Principal Financial Officer and

Principal Accounting Officer)

Date: November 7, 2014

38

EX-10.4

Exhibit 10.4

November 7, 2014

Tom McCartney

9712 Amber Peak Court

Las Vegas, Nevada 89144

        RE:    FIRST LETTER AMENDMENT TO EMPLOYMENT AGREEMENT

Dear Tom:

Reference is made to that certain Employment Agreement, dated as of December 6, 2011, the (“Agreement”), by and between Nevada Property 1 LLC (“Employer”), and Tom McCartney (“Executive”). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

Employer and Executive have agreed to amend certain provisions of the Agreement by this letter amendment (this “First Amendment”). In particular, the parties hereby acknowledge and agree the Specified Term of the Agreement is hereby extended for a period of ninety (90) days, expiring on April 1, 2015.

Except as expressly modified by this First Amendment, the terms of the Agreement remain in full force and effect, unmodified.

NEVADA PROPERTY 1 LLC		EXECUTIVE
By:	/s/ John Unwin	By:	/s/ Thomas J. McCartney
	Name: John Unwin Title: Chief Executive Officer		Name: Thomas J. McCartney Title: Chief Operating Officer

By:	/s/ Ronald G. Eidell
	Name: Ronald G. Eidell Title: Chief Financial Officer

EX-10.5

Exhibit 10.5

November 7, 2014

Lisa Marchese

4575 Dean Martin Dr.

Apartment 602

Las Vegas, Nevada 89109

        RE:    FIRST LETTER AMENDMENT TO EMPLOYMENT AGREEMENT

Dear Lisa:

Reference is made to that certain Employment Agreement, dated as of January 1, 2012, the (“Agreement”), by and between Nevada Property 1 LLC (“Employer”), and Lisa Marchese (“Executive”). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

Employer and Executive have agreed to amend certain provisions of the Agreement by this letter amendment (this “First Amendment”). In particular, the parties hereby acknowledge and agree the Specified Term of the Agreement is hereby extended for a period of ninety (90) days, expiring on April 3, 2015.

Except as expressly modified by this First Amendment, the terms of the Agreement remain in full force and effect, unmodified.

NEVADA PROPERTY 1 LLC		EXECUTIVE
By:	/s/ John Unwin	By:	/s/ Lisa Marchese
	Name: John Unwin Title: Chief Executive Officer		Name: Lisa Marchese Title: Chief Marketing Officer

By:	/s/ Ronald G. Eidell
	Name: Ronald G. Eidell Title: Chief Financial Officer

EX-31.1

Exhibit 31.1

CERTIFICATION

I, John Unwin, Chief Executive Officer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nevada Property 1 LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 7, 2014

/s/ John Unwin

John Unwin

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ronald G. Eidell, Chief Financial Officer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nevada Property 1 LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 7, 2014

/s/ Ronald G. Eidell

Ronald G. Eidell

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,

As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Nevada Property 1 LLC (the “Company”) for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John Unwin, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. the Registrant’s Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of and for the periods presented in the Report.

/s/ John Unwin

John Unwin

Chief Executive Officer

Date: November 7, 2014

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by section 906, has been provided to Nevada Property 1 LLC and will be furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,

As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Nevada Property 1 LLC (the “Company”) for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ronald G. Eidell, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. the Registrant’s Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of and for the periods presented in the Report.

/s/ Ronald G. Eidell

Ronald G. Eidell

Chief Financial Officer

Date: November 7, 2014

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by section 906, has been provided to Nevada Property 1 LLC and will be furnished to the Securities and Exchange Commission or its staff upon request.

XML

Loan Payable and Interest Payable to Affiliate - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Line of Credit Facility [Line Items]
Credit facility with Deutsche Bank AG Cayman Island Branch ("DBCI")	$ 3,900,000,000
Line of credit expiration date	December 2015
Loan payable to affiliate	3,428,094,000	3,499,917,000
Interest payable to affiliate	9,472,000	9,859,000
Interest rate	1.10%
Weighted-average interest rate	1.10%
Deutsche Bank
Line of Credit Facility [Line Items]
Committed line of credit	$ 1,600,000,000
Borrowings, interest rate margin	0.85%

XML

Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Taxes [Line Items]
Effective income tax rates	35.20%	35.00%	35.90%	35.20%
Income tax year under examination			2011
Accrued penalties and interest	$ 0		$ 0

XML

Membership Interests - Additional Information (Detail)	Sep. 30, 2014
Nevada Voteco | Common Class A
Class of Stock [Line Items]
Common Stock membership interests held	100.00%
Nevada Mezz | Common Class B
Class of Stock [Line Items]
Common Stock membership interests held	100.00%

XML

Prepaid Expenses and Other Assets

9 Months Ended

Sep. 30, 2014

Prepaid Expenses and Other Assets

5. Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Prepaid expenses	$	12,218	$	20,604
Other assets		5,855		5,015
	$	18,073	$	25,619

Prepaid expenses as of September 30, 2014 and December 31, 2013 consist primarily of expenses relating to insurance, gaming taxes, marketing, operations, property maintenance and other taxes. Other assets as of September 30, 2014 and December 31, 2013 consist primarily of imprest funds relating to our partner restaurants and security deposits.

XML

Property and Equipment, Net - Additional Information (Detail) (USD $)	3 Months Ended			9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Property, Plant, and Equipment Disclosure [Line Items]
Depreciation expense	$ 41,300,000		$ 42,300,000	$ 124,400,000	$ 131,600,000
Interest, capitalized	300,000		100,000	300,000	100,000
Asset impairment	$ 0	$ 1,506,000		$ 1,506,000

XML

Net Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Land	$ 110,454	$ 110,454
Buildings and buildings and land improvements	2,744,404	2,743,416
Furniture, fixtures and equipment	501,873	493,221
Construction in progress	12,075	6,652
Less: accumulated depreciation	(623,147)	(498,753)
Property and equipment, net	$ 2,745,659	$ 2,854,990

XML

Other Assets - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2014
Liability for Future Policy Benefit, by Product Segment [Line Items]
Loss amount per claim that are covered by traditional insurance program	$ 500,000
Period for which claims under professional liability remain open	10 years
Existing balance in the loss payout account for workers compensation claims	19,300,000
Builders' risk of loss
Liability for Future Policy Benefit, by Product Segment [Line Items]
Loss retained by the company	250,000
General liability
Liability for Future Policy Benefit, by Product Segment [Line Items]
Loss retained by the company	500,000
Employer's liability
Liability for Future Policy Benefit, by Product Segment [Line Items]
Loss retained by the company	500,000
Workers' compensation claims
Liability for Future Policy Benefit, by Product Segment [Line Items]
Loss retained by the company	$ 500,000

XML

Accrued and Other Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accrued and Other Liabilities [Line Items]
Accrued accounts payable	$ 13,537	$ 12,846
Accrued payroll costs	29,994	21,566
Deposits - patrons	3,232	5,098
Advance deposits	14,199	12,896
Chip liability	2,717	5,767
Taxes payable	10,762	7,147
Other liabilities	16,896	17,726
Accrued and other liabilities	$ 91,337	$ 83,046

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Accounts Receivable, Net

9 Months Ended

Sep. 30, 2014

Accounts Receivable, Net

4. Accounts Receivable, Net

Net accounts receivable consist of the following:

	September 30, 2014			December 31, 2013
(In thousands)	(Unaudited)
Casino	$	34,053		$	29,279
Hotel		19,294			19,104
Other		7,311			10,335
		60,658			58,718
Less: allowance for doubtful accounts		(7,068	)		(5,154	)
	$	53,590		$	53,564

Accounts receivable, including casino and hotel receivables, are typically non-interest bearing. The Company issues credit to approved casino customers following investigations of creditworthiness. The allowance for doubtful accounts is estimated based on specific review of customer accounts as well as management’s experience with collection trends in the gaming and hospitality industry and current economic and business conditions.

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Accrued and Other Liabilities - Additional Information (Detail) (The Cosmopolitan of Las Vegas Incentive Award Plan, The Cosmopolitan of Las Vegas Management Exit Award Plan and The Cosmopolitan of Las Vegas Retention Bonus Plan, USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
The Cosmopolitan of Las Vegas Incentive Award Plan, The Cosmopolitan of Las Vegas Management Exit Award Plan and The Cosmopolitan of Las Vegas Retention Bonus Plan
Accrued and Other Liabilities [Line Items]
Expense recognized as a consequence of signing the purchase agreement	$ 7.6	$ 12.7
Contingent payables under the agreements upon closing of the company sale	$ 5.6	$ 5.6

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash held with Deutsche Bank	$ 23,596	$ 32,867
Cash held with third parties and on hand	69,127	25,793
Total cash and cash equivalents	92,723	58,660
Accounts receivable, net	53,590	53,564
Due from affiliate	26,905	56,413
Inventories	13,352	14,575
Deferred income taxes	10,823	11,614
Restricted cash	600	656
Prepaid expenses and other assets	18,073	25,619
Total current assets	216,066	221,101
Property and equipment, net	2,745,659	2,854,990
Intangible asset, net	8,704	9,956
Deferred income taxes	80,558	83,354
Other assets	35,112	35,421
Total assets	3,086,099	3,204,822
Current liabilities:
Accounts payable	17,744	14,403
Interest payable to affiliate	9,472	9,859
Accrued and other liabilities	91,337	83,046
Total current liabilities	118,553	107,308
Accounts payable - construction	237	5,883
Accounts payable - retention		4,059
Accrued and other liabilities - construction	1,569	7,792
Loan payable to affiliate	3,428,094	3,499,917
Other liabilities	4,394	4,982
Total liabilities	3,552,847	3,629,941
Commitments and contingencies (Note 11)
Members' deficit	(466,748)	(425,119)
Total liabilities and members' deficit	$ 3,086,099	$ 3,204,822

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Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Principles

9 Months Ended

Sep. 30, 2014

Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Principles

2. Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Principles

The unaudited interim condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the SEC. Although we believe the disclosures made are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules or regulations. In management’s opinion, all adjustments and normal recurring accruals necessary for a fair presentation of the results for the interim periods have been made. The unaudited results for the three and nine months ended September 30, 2014 are not necessarily indicative of results to be expected for the full fiscal year. The December 31, 2013 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K which was filed with the SEC on March 21, 2014.

The Company is an indirect wholly-owned subsidiary of Deutsche Bank. In the normal course of business, the Company’s operations may include significant transactions conducted with Deutsche Bank or affiliated entities of Deutsche Bank.

Restricted Cash

Restricted cash consists primarily of tokes (tips) earned by our CoStars (the Company identifies its staff as “CoStars”) in the Company’s slot and table games departments and condominium sales deposits plus earned interest that are held in interest bearing escrow accounts. The restricted cash balance at September 30, 2014 is comprised of $0.0 million of advance condominium deposits and $0.6 million of tokes. At December 31, 2013, the restricted cash balance is comprised of $0.3 million of advance condominium deposits and $0.4 million of tokes.

Inventories

Inventories consist of retail merchandise, food and beverage items which are stated at the lower of cost or market value. Cost is determined by the weighted average identification method.

Intangibles

The Company’s finite-lived intangible asset consists of the cost of a property easement right which is amortized using the straight-line method, which approximates the effective interest method, over the life of the easement right of nine years.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities and the Identity Membership Program (“Identity”), our customer guest reward program, estimated cash flows in assessing the recoverability of long-lived assets and asset impairments, and contingencies and litigation. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Although management believes these estimates are based upon reasonable assumptions within the bounds of its knowledge of the Company’s business and operations, actual results could differ materially from those estimates.

Fair Value of Financial Instruments

The carrying value of the Company’s cash and cash equivalents, restricted cash, and accounts payable approximates fair value due to their short-term maturities. All of the Company’s debt is held by an affiliate and accrues interest at an interest rate derived from the three-month London Interbank Offering Rate (“LIBOR”) plus a margin of 85 basis points (0.85%).

LIBOR is determined two days in advance of the funding based on publicly available quotes published by Reuters. Interest is calculated on the basis of actual days outstanding over a 360-day year. Given the related party nature of the Company’s debt, it is unlikely that the Company could obtain similar financing on the same terms with a third-party in an arm’s length transaction.

Reclassifications

For the three and nine months ended September 30, 2013, we have reclassified certain revenues and operating expenses on the Company’s consolidated statement of operations to conform to current period presentations. These reclassifications had no effect on the previously reported operating loss or net loss.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of certain nonfinancial assets. ASU No. 2014-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. Management is currently assessing the impact of the adoption of this accounting pronouncement on the Company’s consolidated financial statements in future periods.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern — Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40). ASU No. 2014-15 requires management to provide an interim and annual assessment concerning an entity’s ability to continue as a going concern, and also requires disclosures under certain circumstances. ASU No. 2014-15 is effective for fiscal years beginning after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. It is currently management’s intent to adopt this accounting pronouncement upon the effective date.

No other new accounting pronouncements issued or effective during 2014 or 2013 have had or are expected to have a material impact on the Company’s financial position or results of operations.

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Related Party Transactions - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended			12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 U S Consolidated Group	Dec. 31, 2013 U S Consolidated Group
Related Party Transaction [Line Items]
Management and other fees for services charged to the company		$ 100,000		$ 100,000
Related party transaction date			Oct. 21, 2010
Arrangements with third parties for payment of expenses of affiliates	200,000	200,000	600,000	700,000
Net operating loss	(14,510,000)	(19,950,000)	(36,966,000)	(77,000,000)	(26,900,000)	(56,400,000)
Loss before income taxes	(23,689,000)	(29,842,000)	(64,934,000)	(106,952,000)
Income tax benefit	$ (8,340,000)	$ (10,437,000)	$ (23,305,000)	$ (37,608,000)

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2014

Related Party Transactions

The following table sets forth amounts held with, receivable from and payable to affiliates and Deutsche Bank:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Cash held with Deutsche Bank	$	23,596	$	32,867
Due from affiliate		26,905		56,413
Loan payable to affiliate		3,428,094		3,499,917
Interest payable to affiliate		9,472		9,859

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Commitments, Contingencies and Litigation - Additional Information (Detail) (USD $)				0 Months Ended	9 Months Ended	0 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Jun. 30, 2013 Operating Expense	Dec. 31, 2013 Remaining under Contract at Cosmopolitan Property	Sep. 30, 2014 Standby Letters of Credit CreditFacility	Nov. 07, 2014 Standby Letters of Credit Subsequent Event	Sep. 30, 2014 Revolving Line Of Credit	Sep. 30, 2014 Penta Building Group ("Penta")	Dec. 31, 2013 Penta Building Group ("Penta")
Commitments and Contingencies Disclosure [Line Items]
Accrued estimated loss contingency			$ 3,000,000
Construction commitments	1,800,000	17,700,000						0	9,500,000
Credit facility with Deutsche Bank AG Cayman Island Branch ("DBCI")	3,900,000,000
Line of credit					2,600,000		20,000,000
Number of letter of credit					2
Letters of credit outstanding, amount					0
Letter of credit cancelled amount						$ 2,200,000
Number of condominium unit				2

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Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Principles - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended					9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 Advanced condominium deposits	Dec. 31, 2013 Advanced condominium deposits	Sep. 30, 2014 Tokes	Dec. 31, 2013 Tokes	Sep. 30, 2014 Three Month LIBOR
Basis of Presentation [Line Items]
Restricted cash		$ 0	$ 0.3	$ 0.6	$ 0.4
Finite-lived intangible asset, useful life	9 years
Debt held by affiliates, interest rate						0.85%

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Taxes

3. Income Taxes

For the three months ended September 30, 2014 and 2013, the effective income tax rates were (35.2%) and (35.0%) for each of the respective periods. For the nine months ended September 30, 2014 and 2013, the effective income tax rates were (35.9%) and (35.2%) for each respective period.

Due to the September 2014 opening of a Canadian satellite office, the Company is now subject to income tax filing requirements in Canada. As such, the Company’s tax jurisdictions are the United States and Canada. Effective January 1, 2012, pursuant to broader tax reorganization, the Company is part of a Corporate Consolidated Tax Group (the “U.S. Consolidated Group”) owned by a subsidiary of Deutsche Bank. As a result, the Company joined the U.S. Consolidated Group after having been a separate taxpayer in 2011.

During the quarter ended June 30, 2013, the IRS notified the Company that its 2011 federal income tax return was selected for examination. As of September 30, 2014, the IRS has not commenced an audit on the aforementioned tax year period nor have we received any additional correspondence regarding the matter. The Company believes that it has no uncertain tax positions; however, there is no assurance that the taxing authorities will not propose adjustments that are different than the Company’s expected outcome and impact the provision for income taxes. As applicable, we recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes. For the three and nine months ended September 30, 2014, there were no accrued penalties and/or interest.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:
Casino	$ 55,567	$ 44,374	$ 156,067	$ 115,895
Hotel	80,346	66,902	236,886	201,900
Food and beverage	83,480	81,312	264,159	246,038
Entertainment, retail and other	12,200	8,816	30,784	25,647
Gross revenues	231,593	201,404	687,896	589,480
Less - promotional allowances	(42,630)	(31,310)	(115,957)	(88,677)
Net revenues	188,963	170,094	571,939	500,803
Operating expenses:
Casino	34,145	28,582	96,644	83,973
Hotel	8,602	9,921	27,151	30,279
Food and beverage	54,599	54,567	174,102	162,520
Entertainment, retail and other	11,424	8,203	29,826	22,263
Sales and marketing	12,620	11,445	50,102	49,383
General and administrative	27,620	29,568	79,278	80,466
Corporate	12,787	3,193	24,563	13,856
Pre-opening		1,727		2,172
Loss on disposal of assets	2	79	117	85
Asset impairment	0		1,506
Depreciation and amortization	41,674	42,759	125,616	132,806
Total operating expenses	203,473	190,044	608,905	577,803
Operating loss	(14,510)	(19,950)	(36,966)	(77,000)
Other income (expense):
Net settlement and default income			245	217
Interest and other income	8	11	38	28
Interest expense due to affiliate, net of amounts capitalized	(9,187)	(9,903)	(28,251)	(30,197)
Total other income (expense)	(9,179)	(9,892)	(27,968)	(29,952)
Loss before income taxes	(23,689)	(29,842)	(64,934)	(106,952)
Income tax benefit	8,340	10,437	23,305	37,608
Net loss	$ (15,349)	$ (19,405)	$ (41,629)	$ (69,344)

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Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Principles (Policies)

9 Months Ended

Sep. 30, 2014

Restricted Cash

Restricted Cash

Restricted cash consists primarily of tokes (tips) earned by our CoStars (the Company identifies its staff as “CoStars”) in the Company’s slot and table games departments and condominium sales deposits plus earned interest that are held in interest bearing escrow accounts. The restricted cash balance at September 30, 2014 is comprised of $0.0 million of advance condominium deposits and $0.6 million of tokes. At December 31, 2013, the restricted cash balance is comprised of $0.3 million of advance condominium deposits and $0.4 million of tokes.

Inventories

Inventories

Inventories consist of retail merchandise, food and beverage items which are stated at the lower of cost or market value. Cost is determined by the weighted average identification method.

Intangibles

Intangibles

The Company’s finite-lived intangible asset consists of the cost of a property easement right which is amortized using the straight-line method, which approximates the effective interest method, over the life of the easement right of nine years.

Use of Estimates

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities and the Identity Membership Program (“Identity”), our customer guest reward program, estimated cash flows in assessing the recoverability of long-lived assets and asset impairments, and contingencies and litigation. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Although management believes these estimates are based upon reasonable assumptions within the bounds of its knowledge of the Company’s business and operations, actual results could differ materially from those estimates.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying value of the Company’s cash and cash equivalents, restricted cash, and accounts payable approximates fair value due to their short-term maturities. All of the Company’s debt is held by an affiliate and accrues interest at an interest rate derived from the three-month London Interbank Offering Rate (“LIBOR”) plus a margin of 85 basis points (0.85%).

LIBOR is determined two days in advance of the funding based on publicly available quotes published by Reuters. Interest is calculated on the basis of actual days outstanding over a 360-day year. Given the related party nature of the Company’s debt, it is unlikely that the Company could obtain similar financing on the same terms with a third-party in an arm’s length transaction.

Reclassifications

Reclassifications

For the three and nine months ended September 30, 2013, we have reclassified certain revenues and operating expenses on the Company’s consolidated statement of operations to conform to current period presentations. These reclassifications had no effect on the previously reported operating loss or net loss.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of certain nonfinancial assets. ASU No. 2014-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. Management is currently assessing the impact of the adoption of this accounting pronouncement on the Company’s consolidated financial statements in future periods.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern — Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40). ASU No. 2014-15 requires management to provide an interim and annual assessment concerning an entity’s ability to continue as a going concern, and also requires disclosures under certain circumstances. ASU No. 2014-15 is effective for fiscal years beginning after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. It is currently management’s intent to adopt this accounting pronouncement upon the effective date.

No other new accounting pronouncements issued or effective during 2014 or 2013 have had or are expected to have a material impact on the Company’s financial position or results of operations.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 07, 2014 Class A Membership Interests	Nov. 07, 2014 Class B Membership Interests
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Registrant Name	NEVADA PROPERTY 1 LLC
Entity Central Index Key	0001485589
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		100	100

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Accounts Receivable, Net (Tables)

9 Months Ended

Sep. 30, 2014

Accounts Receivable, Net

Net accounts receivable consist of the following:

	September 30, 2014			December 31, 2013
(In thousands)	(Unaudited)
Casino	$	34,053		$	29,279
Hotel		19,294			19,104
Other		7,311			10,335
		60,658			58,718
Less: allowance for doubtful accounts		(7,068	)		(5,154	)
	$	53,590		$	53,564

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (41,629)	$ (69,344)
Deferred income taxes	(23,318)	(37,608)
Depreciation and amortization	125,616	132,806
Asset impairment	1,506
Loss on disposal of assets	117	85
Changes in operating assets and liabilities:
Accounts receivable, net	(26)	11,742
Due from affiliate	56,413	83,105
Inventories	1,223	(1,494)
Prepaid expenses and other assets	7,583	6,802
Accounts payable	3,341	2,822
Accrued and other liabilities	7,975	(297)
Interest payable to affiliate	(387)	(926)
Restricted cash	56	444
Net cash provided by operating activities	138,470	128,137
Cash flows from investing activities:
Ordinary capital expenditures	(14,676)	(12,234)
Capital expenditures from major developments and for construction projects	(17,908)	(37,206)
Net cash used in investing activities	(32,584)	(49,440)
Cash flows from financing activities:
Borrowings under loan payable to affiliate	9,777	37,627
Principal payments under loan payable to affiliate	(81,600)	(98,105)
Net cash used in financing activities	(71,823)	(60,478)
Net increase in cash and cash equivalents	34,063	18,219
Cash and cash equivalents at beginning of period	58,660	48,811
Cash and cash equivalents at end of period	92,723	67,030
Supplemental disclosure of cash flow information:
Cash paid for interest due to affiliate, net of interest capitalized	28,839	31,123
Non-cash investing activities:
Change in accrued additions to construction in progress	$ (15,928)	$ 8,512

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Accrued and Other Liabilities

9 Months Ended

Sep. 30, 2014

Accrued and Other Liabilities

8. Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Accrued accounts payable	$	13,537	$	12,846
Accrued payroll costs		29,994		21,566
Deposits — patrons		3,232		5,098
Advance deposits		14,199		12,896
Chip liability		2,717		5,767
Taxes payable		10,762		7,147
Other liabilities		16,896		17,726
	$	91,337	$	83,046

During the three and nine months ended September 30, 2014, the Company recognized $7.6 million and $12.7 million, respectively, in expense related to The Cosmopolitan of Las Vegas Incentive Award Plan, The Cosmopolitan of Las Vegas Management Exit Award Plan and The Cosmopolitan of Las Vegas Retention Bonus Plan associated with the signing of the Purchase Agreement. These amounts were included within corporate operating expenses on the condensed consolidated statements of operations. Additional amounts of up to $5.6 million could be payable under the agreements upon closing of the Company Sale.

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Other Assets

9 Months Ended

Sep. 30, 2014

Other Assets

7. Other Assets

Other long-term assets primarily consist of the Company’s base stock of china, glassware, uniforms, etc., as well as a deposit for workers’ compensation claims incurred but not reported (“IBNR”), a loss payout account for the Company’s owner controlled insurance program (“OCIP”). The IBNR reserve estimate is determined on our actual historical expense experience and reporting patterns.

During certain construction periods, the Company maintains a comprehensive OCIP for the following insurance coverage: workers’ compensation, primary general liability, excess liability, contractors’ pollution legal liability, builders’ risk and project professional liability. The general contractor and all of the subcontractors working on the Property were required to enroll in the program.

The Company is exposed on a first dollar loss basis for claims filed under either the workers compensation or general liability portions of the OCIP. The Company retains the first $250,000 of the builders’ risk of loss, and $500,000 of each general liability, employer’s liability, and workers’ compensation claims. Claims that exceed the maximum loss amount of $500,000 per claim are covered by a traditional insurance program. The loss payout account receives interest at a rate based on the terms of the policy. The loss payout account will remain open and continue to pay claims until all claims are paid and closed or until the Company’s obligations have been met. The completed operations and professional liability claims period remains open for ten years following the completion of the Property in compliance with Nevada regulations. For insurance coverage purposes, the project completion date was established as December 1, 2010. Workers’ compensation claims remain open until all claims are settled or benefits paid. Once all claims are paid and all obligations are settled, any residual funds in the loss payout account will be returned to the Company. The Company believes the existing balance in the loss payout account of $19.3 million at September 30, 2014 is sufficient to pay all existing and expected future claims related to the Property.

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Organization and Description of the Business - Additional Information (Detail) (USD $) In Billions, unless otherwise specified	0 Months Ended	9 Months Ended
	May 15, 2014	Sep. 30, 2014
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Membership interests description		Nevada Voteco LLC ("Nevada Voteco") holds 100% of the Company's Class A voting membership interests and Nevada Mezz 1 LLC ("Nevada Mezz") holds 100% of the Company's Class B non-voting membership interests.
Membership interests transfer, cash consideration	$ 1.73
Credit facility with Deutsche Bank AG Cayman Island Branch ("DBCI")		$ 3.9
Nevada Voteco | Common Class A
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Common Stock membership interests held		100.00%
Nevada Mezz | Common Class B
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Common Stock membership interests held		100.00%

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Prepaid Expenses and Other Assets (Tables)

9 Months Ended

Sep. 30, 2014

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Prepaid expenses	$	12,218	$	20,604
Other assets		5,855		5,015
	$	18,073	$	25,619

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Commitments, Contingencies and Litigation

9 Months Ended

Sep. 30, 2014

Commitments, Contingencies and Litigation

11. Commitments, Contingencies and Litigation

Prior to the issuance of any of its quarterly or annual financial results and for the purposes of accrual and/or disclosure, we analyze each of our material legal proceedings and other contingencies to determine whether an estimate of a probable or reasonably possible loss or range of loss can be made based upon the facts and legal assessment of such matters. During such assessment, we consider all factors that may impact this assessment, including, without limitation, (a) the stage of the proceeding; (b) the damages, penalties and costs sought; (c) the factual matters that remain to be resolved; and (d) the legal principles that are the subject of the proceeding. It is often not possible to estimate the loss or a range of possible loss, particularly where (i) the damages sought are unsubstantiated or indeterminate; (ii) the discovery or other material legal proceedings are incomplete; (iii) the proceedings are in the early stages and there is insufficient information available to assess the viability of the stated grounds; (iv) the matters present legal uncertainties; or (v) there are significant facts in dispute. In such cases, there are considerable uncertainties regarding the resolution of the proceeding, which may preclude the determination of the reasonably possible loss or range or loss.

Class Action Suits

a. Wage and Hour

During late 2012, the Company was put on notice and/or served with two separate purported class action lawsuits related to alleged unpaid compensation for time incurred by CoStars’ while on Property for donning and doffing of the CoStars’ required uniform, alleged improper rounding of time for hours worked and various other claims related to alleged unpaid compensation. One of the purported wage and hour class action lawsuits is pending in the Eighth Judicial District Court for Clark County, Nevada (“Nevada State Court”), and one is pending in the U.S. District Court for the District of Nevada. The discovery period as to liability has closed in both cases.

In 2014, the plaintiffs’ in the Nevada State Court action filed a motion to certify all proposed classes. Additionally, in June 2014, the plaintiffs’ filed various liens against the Property. The Company has opposed the motion to certify all classes and filed motions for summary judgment and dismissal. In September 2014, the Nevada State Court ordered the plaintiffs’ liens to be expunged. No decisions on the dispositive motions have been issued.

With respect to the U.S. District Court for the District of Nevada actions, during 2014, the Company filed a motion to decertify the one conditionally certified class and for summary judgment and dismissal. Plaintiff filed a motion to certify all classes of employees under the federal rules. All of these motions remain pending at this time.

During the second quarter of 2013, as part of an ongoing assessment of our wage and hour cases, we accrued an estimated loss contingency of $3.0 million (reported as a corporate operating expense in the condensed consolidated statement of operations beginning with the June 30, 2013 quarterly reporting period). A portion of the loss contingency was utilized in the October 2013 settlement of a third purported wage and hour class action matter, with subsequent payment occurring during the first quarter of 2014. We will continue evaluating the adequacy of this accrual as the cases develop. Specific additional factors applicable to each case that prevent the Company from providing an estimate of reasonably possible loss in excess of amounts accrued or range of loss include, but are not limited to: (1) whether class certification will be granted and the scope of any class or subclass; (2) the quantification of highly variable damages claimed by the purported classes and subclasses asserted in separate, but overlapping litigation are unspecified or indeterminate; and (3) the outcome of any future settlement negotiations, should they occur, as they may apply to limit the class or eliminate all class claims. Legal fees associated with the cases are recognized as incurred when the legal services are rendered, and are, therefore, not recognized as part of the loss contingency accrual.

The Company believes that it has meritorious defenses with respect to the remaining open matters and intends to defend its positions vigorously.

b. Alleged Unlawful Taping/Recording

A purported class action lawsuit was filed during the quarterly period ended September 30, 2012 in Superior Court in the State of California against the Company, alleging violation of the California Penal Code regarding the unlawful taping or recording of calls. On August 31, 2012, the Company moved the case to U.S. District Court for the Southern District of California. Subsequently, the Company filed a motion to dismiss, or in the alternative, to strike the class allegations. On July 15, 2013, the U.S. District Court for the Southern District of California issued an order denying these motions.

Significant discovery has commenced and depositions have occurred, but no motions to certify a class or subclasses have been filed. All discovery that relates to class certification issues must be completed by January 2015 and the plaintiff must file a motion for class certification by March 2015. The Company will file its opposition to any motion for class certification by April 2015. The U.S. District Court for the Southern District of California will set a pretrial schedule after its ruling on the class certification motion.

Substantial questions of law and fact are unresolved. Specific additional factors applicable to this case that prevent the Company from providing an estimate of reasonably possible loss or range of loss include, but are not limited to: (1) whether class certification will be granted and the scope of any class or subclass; (2) the quantification of highly variable damages claimed by the purported class are unspecified or indeterminate; and (3) the outcome of any future settlement negotiations, should they occur, as they may apply to limit the class or eliminate all class claims. As a result, the Company cannot at this time determine the potential impact of the lawsuit on the consolidated financial position, cash flows, or results of operations of the Company. The Company believes that it has meritorious defenses with respect to this matter and intends to defend its position vigorously.

Given the uncertainty of the procedural and substantive legal and factual matters set forth above, no estimate of the reasonably possible loss or range of loss in excess of amounts accrued, if any, can be made at this time with respect to the wage and hour and alleged unlawful taping/recording purported class action lawsuits, nor can the Company determine when it will be able to make such an estimate. Our assessment of these matters may change based on future unexpected events. An unexpected adverse judgment could cause a material impact on our business operations, results of operations or financial position. Unless otherwise expressly stated, we believe costs associated with litigation will not have a material impact on our financial position or liquidity, but may be material to the results of operations in any given period.

Commitments and Other Legal Proceedings

a. Property General Contractor and Other Purchase Obligations

During 2012, the Company engaged Penta Building Group (“Penta”) to act as the general contractor for certain Property projects. Penta operates under a guaranteed maximum price (“GMP”) contract that defines the scope of work to be performed, establishes the budget for the scope of work, and sets the general time scale of the job. At September 30, 2014 and December 31, 2013, the respective remaining amounts expected to be paid to Penta under the GMP and approved change orders total $0.0 million and $9.5 million.

As of September 30, 2014 and December 31, 2013, the Company had total construction commitments of $1.8 million and $17.7 million, respectively.

Within the Company’s credit line of $3.9 billion from DBCI is a revolving line of credit of $20.0 million reserved for purposes of issuing standby letters of credit. At September 30, 2014, the Company maintained two standby letters of credit totaling $2.6 million pursuant to agreements related to insurance and an administrative office lease. There were no outstanding borrowings against these standby letters of credit as of September 30, 2014.

Subsequent to September 30, 2014, the $2.2 million standby letter of credit relating to insurance services was cancelled.

b. Condominium Hotel Litigation

As disclosed in prior periods, the Company was a named defendant in a number of lawsuits and arbitrations concerning the purchase and sale of condominium hotel units located within the East and West Towers of the Property. The thrust of the claims were virtually the same in every matter. The plaintiffs alleged, among other things, that the project had materially changed and that delays in the completion of the Property constituted a material breach by the Company, thus permitting the plaintiff/purchaser to rescind their contract and receive a full refund of their earnest money deposit, plus interest thereon. The Company was represented in each of these matters by outside legal counsel.

On or about August 26, 2013, a purported class action lawsuit was filed against the Company in the U.S. District Court for the Central District of California, captioned Lenny Spangler v. Nevada Property 1 LLC, et al., alleging, among other things, that former class action settlements entered into by the Company with buyers of condominium hotel units in the project were fraudulently induced, and seeking to recover all amounts paid to or retained by the Company in such settlements. During 2014, the plaintiff agreed to dismiss the case in exchange for a waiver and release by the Company of its claims for costs related to the lawsuit. A formal order of dismissal was subsequently entered with the U.S. District Court for the District of Nevada.

At December 31, 2013, there were two condominium hotel units remaining under contract at The Cosmopolitan (the “Okada Unit” and the “Mastej Unit”). During the three months ended March 31, 2014, the Company prevailed in its efforts to confirm and enforce prior arbitration awards for each of the Okada Unit and the Mastej Unit. As such, the applicable earnest money deposits were released to the Company.

On or about March 3, 2014, a complaint was filed against the Company in the U.S. District Court for the Central District of California, captioned Donald Okada v. Nevada Property 1 LLC, et al., alleging, among other things, that former class action settlements entered into by the Company with buyers of condominium hotel units in the project were fraudulently induced thus permitting the plaintiff to recover the full earnest money deposit and related attorney fees. During July 2014, the complaint against the Company was dismissed without prejudice and the plaintiff was granted leave to file an amended complaint. On or about July 21, 2014, the plaintiff filed an amended complaint in the U.S. District Court for the Central District of California. Subsequently, the U.S. District Court for the Central District of California granted the Company’s motion to transfer venue of the case to the U.S. District Court for the District of Nevada. In October 2014, the Company submitted a motion in the case to compel the matter to binding arbitration.

With respect to the Mastej Unit, on or about April 1, 2014, a Notice of Appeal was filed with the Nevada Supreme Court regarding the grant of the Company’s motion to confirm and enforce the arbitration award. That matter is in the earliest stages of proceedings.

c. Hearst Trademark

In December 2009, the Company entered into a co-existence agreement with Hearst Communications, Inc. (“Hearst”), which resulted in a settlement and dismissal of all trademark infringement claims that were the subject of an ongoing lawsuit between the Company and Hearst. The co-existence agreement provides that the Company may utilize the “Cosmopolitan” name and marks within certain defined parameters. Specifically, the co-existence agreement provides that the Company should use (i) the word “the” preceding the word “Cosmopolitan” (e.g. “The Cosmopolitan”), or (ii) words identifying physical locations or attractions of our hotel-casino properties preceding or following the word “Cosmopolitan” (e.g., “Cosmopolitan Residences” or “Cosmopolitan Beach Club”), or (iii) “Las Vegas” preceding and/or following the word “Cosmopolitan” (e.g., “Cosmopolitan Las Vegas”, etc.). The co-existence agreement further provides that the use of the “Cosmopolitan” marks be limited to the operation, promotion, marketing, and advertising of hotel-casino properties and related products and services. The co-existence agreement also provides for certain limitations regarding the use of “Cosmopolitan” marks in connection with women’s fashion products and the use of the term “Cosmo”.

d. Patent Infringement

On July 14, 2013, the Company filed a lawsuit against Activision TV, Inc. (“Activision”) in the U.S. District Court for the District of Nevada for a declaration that it is not infringing on various patents owned by Activision relating to digital displays installed at the Property by third-party vendors. During the quarter ended June 30, 2014, the Company resolved the case with no financial impact.

e. Vegas Nocturne

In July 2014, the Company announced the closure of the Vegas Nocturne live entertainment performance show at Rose. Rabbit. Lie., and, based upon contractual terms, the cessation of its relationship with Spiegelworld CSC, LLC (“Spiegelworld”). On August 6, 2014, Spiegelworld filed a complaint in the District Court of Clark County, Nevada, alleging among other things, causes of action for breach of contract and declaratory relief.

On or about August 28, 2014, the Company filed an answer and counterclaim against Spiegelworld in the District Court of Clark County, Nevada, alleging, among other things, causes of action for breach of contract, fraud, breach of fiduciary duties and injunctive relief.

This matter is in the earliest stages of proceedings. As a result, the Company cannot at this time determine the potential impact of the complaint on the consolidated financial position, cash flows, or results of operations of the Company. The Company believes that it has meritorious defenses with respect to this matter and intends to defend its position vigorously.

f. Other Matters

The Company is also subject to various other ordinary and routine claims and litigation arising in the normal course of business. In the opinion of management, all pending other legal matters are either adequately covered by insurance or, if not insured, will not have a material adverse impact on the consolidated financial position, cash flows, or the results of operations of the Company.

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Loan Payable and Interest Payable to Affiliate

9 Months Ended

Sep. 30, 2014

Loan Payable and Interest Payable to Affiliate

9. Loan Payable and Interest Payable to Affiliate

The Company maintains a $3.9 billion credit facility which includes a $1.6 billion committed line of credit with DBCI. DBCI has no obligation to provide the Company with additional funding beyond the Credit Facility. The current expiration of the Credit Facility is December 2015. Borrowings carry an interest rate of LIBOR plus a margin of 85 basis points (0.85%). Interest on the loan is payable in arrears and is due and payable on the first business day of each quarter. The Credit Facility does not include any financial covenants.

Under the terms of the Credit Facility, proceeds may be used to pay for (i) the costs of constructing and completing our fully-integrated resort; (ii) Property operating deficits; and, (iii) payment of interest on the Credit Facility to the extent that cash flow from the Property is insufficient to pay such interest after paying the cost of operating the Property. All outstanding debt becomes due and payable upon a change of control of the Company.

The total amount of the loan payable to affiliate at September 30, 2014 and December 31, 2013 is $3.4 billion and $3.5 billion, respectively. Additionally, at September 30, 2014 and December 31, 2013, the Company has an interest payable to affiliate of $9.5 million and $9.9 million, respectively, with a September 30, 2014 interest rate of 1.1% and, for the nine months ended September 30, 2014, a weighted average interest rate of approximately 1.1%.

The Company classifies construction-related accounts payable, retention and accrued and other liabilities as long-term liabilities as they are financed by the Company’s Credit Facility and, therefore, will not require the use of working capital.

As discussed in Note 1 — Organization and Description of Business — Company Overview — Sale or Transfer of Members’ Equity Interests, on May 15, 2014, the Company entered into the Purchase Agreement for the Company Sale. The Purchase Agreement provides that on or prior to the closing of the Company Sale, Deutsche Bank or its applicable affiliate will release and discharge the Company from all further obligations under the Credit Facility at no cost to the Purchaser or the Company or its subsidiaries.

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Related Party Transactions

9 Months Ended

Sep. 30, 2014

Related Party Transactions

10. Related Party Transactions

The Company is involved in significant financing and other transactions with certain of its affiliates and Deutsche Bank. The following table sets forth amounts held with, receivable from and payable to affiliates and Deutsche Bank:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Cash held with Deutsche Bank	$	23,596	$	32,867
Due from affiliate		26,905		56,413
Loan payable to affiliate		3,428,094		3,499,917
Interest payable to affiliate		9,472		9,859

Prior to January 1, 2014, Deutsche Bank provided certain administrative and other support services to the Company, including accounting, development management, procurement logistics, and legal. The Company was charged $0.1 million during each of the respective three and nine months ended September 30, 2013.

On October 21, 2010, the Company entered into an agreement with Nevada Voteco to pay for all expenses relating to Nevada Voteco and the Nevada Voteco members including costs incurred for the services of all advisors and consultants to the extent such costs are reasonable and documented. On behalf of Nevada Voteco, the Company paid $0.2 million during each of the three months ended September 30, 2014 and 2013, respectively, and $0.6 million and $0.7 million during the nine months ended September 30, 2014 and 2013, respectively.

The Purchase Agreement provides that on or prior to the closing of the Company Sale, Deutsche Bank or its applicable affiliate will release and terminate all intercompany agreements and all accounts receivable and all accounts payable in connection with the Purchase Agreement, at no cost to the Purchaser or the Company or its subsidiaries.

Effective January 1, 2012, pursuant to a broader tax reorganization, the Company became part of a U.S. Consolidated Group owned by a subsidiary of Deutsche Bank. As of September 30, 2014 and December 31, 2013, the Company had a current tax-effected net operating loss of $26.9 million and $56.4 million, respectively, which will be utilized by the U.S. Consolidated Group, and which is presented as a component of the receivable from affiliate in the accompanying condensed consolidated balance sheets. During the three months ended June 30, 2014, the Company was reimbursed $56.4 million for the utilization of its net operating losses in prior periods by the U.S. Consolidated Group.

In addition, the Company generated $23.7 million ($8.3 million, tax-effected) of net operating losses in the three months ended September 30, 2014 which are presented as a component of due from affiliate in the accompanying condensed consolidated balance sheet. The Company generated $29.8 million ($10.4 million, tax-effected) of net operating losses in the three months ended September 30, 2013. For the respective nine months ended September 30, 2014 and 2013, the Company generated $64.9 million ($23.3 million, tax-effected) and $107.0 million ($37.6 million, tax-effected) of net operating losses.

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Membership Interests

9 Months Ended

Sep. 30, 2014

Membership Interests

12. Membership Interests

The Company’s membership interests are comprised of Class A and Class B membership interests. Holders of Class A membership interests are entitled to vote on any matter to be voted upon by the Members. Holders of Class B membership interests have all the economic interests in the Company and, except as provided by law, do not have any right to vote.

At and for the nine months ended September 30, 2014, Nevada Voteco holds 100% of the Company’s Class A membership interests and Nevada Mezz holds 100% of the Company’s Class B membership interests.

See Note 1 — Organization and Description of the Business — Company Overview — Sale or Transfer of Members’ Equity Interests for a discussion concerning the Company Sale.

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Related Party Transactions (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Cash held with Deutsche Bank	$ 23,596	$ 32,867
Due from affiliate	26,905	56,413
Loan payable to affiliate	3,428,094	3,499,917
Interest payable to affiliate	$ 9,472	$ 9,859

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Accrued and Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

	September 30, 2014		December 31, 2013
(In thousands)	(Unaudited)
Accrued accounts payable	$	13,537	$	12,846
Accrued payroll costs		29,994		21,566
Deposits — patrons		3,232		5,098
Advance deposits		14,199		12,896
Chip liability		2,717		5,767
Taxes payable		10,762		7,147
Other liabilities		16,896		17,726
	$	91,337	$	83,046

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Net Accounts Receivables (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	$ 60,658	$ 58,718
Less: allowance for doubtful accounts	(7,068)	(5,154)
Accounts receivable, net	53,590	53,564
Casino
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	34,053	29,279
Hotel
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	19,294	19,104
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	$ 7,311	$ 10,335

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Organization and Description of the Business

9 Months Ended

Sep. 30, 2014

Organization and Description of the Business

1. Organization and Description of the Business

Company Overview

Sale or Transfer of Members’ Equity Interests

Nevada Property 1 LLC, a limited liability company organized in Delaware (the “Company”), owns and operates The Cosmopolitan of Las Vegas (the “Property” or “The Cosmopolitan”) which commenced operations on December 15, 2010.

Nevada Voteco LLC (“Nevada Voteco”) holds 100% of the Company’s Class A voting membership interests and Nevada Mezz 1 LLC (“Nevada Mezz”) holds 100% of the Company’s Class B non-voting membership interests. The Company continues in perpetuity until dissolved upon the election of Nevada Mezz and Nevada Voteco or through a judicial dissolution under Section 18-802 of the Delaware Limited Liability Company Act. Nevada Voteco and Nevada Mezz are collectively referred to as the “Members” within this Quarterly Report on Form 10-Q.

On May 15, 2014, we reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) that Nevada Mezz, Deutsche Bank AG (“Deutsche Bank”) and the Company had entered into a Purchase Agreement (the “Purchase Agreement”) with BRE Spade Mezz 1 LLC, an affiliate of Blackstone Real Estate Partners VII L.P., for the sale of all of the Company’s Class B non-voting membership interests held by Nevada Mezz. The Purchase Agreement also provides for the transfer to BRE Spade Voteco LLC, a newly-formed affiliate of Blackstone Real Estate Partners VII L.P., of all of the Company’s Class A voting membership interests held by Nevada Voteco (together with the sale of Class B interests, the “Company Sale”). BRE Spade Mezz 1 LLC and BRE Spade Voteco LLC are collectively referred to as the “Purchaser” in this Quarterly Report on Form 10-Q.

Subject to potential net working capital adjustments as defined in the Purchase Agreement, the all cash consideration for the membership interests totaled approximately $1.73 billion. The Purchase Agreement was unanimously approved by the Company’s Board of Directors.

The consummation of the Company Sale is subject to the receipt of certain regulatory approvals, along with other customary closing conditions.

The Company currently maintains a $3.9 billion credit facility (the “Credit Facility”) with the Deutsche Bank AG Cayman Islands Branch (“DBCI”), a branch of Deutsche Bank AG, as well as other related party agreements for member expense reimbursements, among other things. See Note 9 — Loan Payable and Interest Payable to Affiliate and Note 10 — Related Party Transactions for further discussion concerning termination, discharge and release of the Company’s obligations related to the Credit Facility and the intra-group arrangements upon successful completion of the Company Sale.

Corporate Structure

The Company’s wholly-owned subsidiaries are Nevada Restaurant Venture 1 LLC (“Nevada Restaurant”), which was formed on November 24, 2009 as a limited liability company in Delaware and Nevada Retail Venture 1 LLC (“Nevada Retail”), which was also formed on November 24, 2009 as a limited liability company in Delaware. Nevada Restaurant master leases the Property’s restaurants and the nightclub from the Company and has entered into management agreements with third-party restaurant operators and a nightclub operator to manage and operate their respective establishments at the Property. Nevada Retail master leases the retail spaces at the Property from the Company and operates certain of the retail spaces within the Property. In addition, Nevada Retail has also entered into lease agreements with third-party retail operators to manage and operate their respective retail businesses at the Property.

The Company’s operations, which includes hotel, casino, food and beverage, retail, spa and entertainment and other related operations, are conducted entirely at the Property. Given the integrated nature of these operations, the Company is considered to have one operating segment.

The principal executive offices of The Cosmopolitan of Las Vegas are located at 3708 Las Vegas Boulevard South, Las Vegas, Nevada 89109 and the telephone number is (702) 698-7000. The Cosmopolitan’s internet website is located at www.cosmopolitanlasvegas.com. The information on our website is not part of this Quarterly Report on Form 10-Q.

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2014

Property and Equipment, Net

6. Property and Equipment, Net

Net property and equipment are stated at the lower of cost or fair value and consist of the following:

	September 30, 2014			December 31, 2013
(In thousands)	(Unaudited)
Land	$	110,454		$	110,454
Buildings and buildings and land improvements		2,744,404			2,743,416
Furniture, fixtures and equipment		501,873			493,221
Construction in progress		12,075			6,652
Less: accumulated depreciation		(623,147	)		(498,753	)
	$	2,745,659		$	2,854,990

Depreciation expense of $41.3 million and $42.3 million was incurred during the three months ended September 30, 2014 and 2013, respectively, and $124.4 million and $131.6 million was incurred during the nine months ended September 30, 2014 and 2013, respectively.

The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. Interest of $0.3 million and $0.1 million was capitalized for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, interest of $0.3 million and $0.1 million, respectively, was capitalized.

In July 2014, the Company announced the closure of the Vegas Nocturne live entertainment performance show at Rose. Rabbit. Lie. As a result, the Company determined that certain long-lived assets related specifically to the show may be impaired. Accordingly, the Company estimated the undiscounted future cash flows to be generated from the identified long-lived assets over their remaining useful life to continue to be negative, resulting in a $1.5 million write-down of the identified assets, which was reported as an asset impairment in the Company’s condensed consolidated statements of operations for the three months ended June 30, 2014 and the nine months ended September 30, 2014. No potential impairment charges were identified or recorded by the Company during the prior year periods or for the three months ended September 30, 2014.

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Prepaid Expenses and Other Assets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Other Assets, Current [Line Items]
Prepaid expenses	$ 12,218	$ 20,604
Other assets	5,855	5,015
Prepaid expenses and other assets	$ 18,073	$ 25,619

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2014

Property and Equipment, Net

Net property and equipment are stated at the lower of cost or fair value and consist of the following:

	September 30, 2014			December 31, 2013
(In thousands)	(Unaudited)
Land	$	110,454		$	110,454
Buildings and buildings and land improvements		2,744,404			2,743,416
Furniture, fixtures and equipment		501,873			493,221
Construction in progress		12,075			6,652
Less: accumulated depreciation		(623,147	)		(498,753	)
	$	2,745,659		$	2,854,990