Casino business Wynn Resorts Ltd says it has made “meaningful progress” on the debt financing for the Wynn Al Marjan Island project (pictured in an artist’s rendering) in which it is an equity partner in Ras Al Khaimah in the United Arab Emirates (UAE). It has also purchased its pro-rata share of the reclamation land on which the scheme sits.
“We’ve… made meaningful progress on the debt financing for the project with significant interest from a diverse group of banks both locally in the region as well as internationally,” stated Julie Cameron-Doe, the group’s chief financial officer, speaking on the group’s second-quarter earnings call on Tuesday.
“We expect the financing will be completed later this year, and we will update you in due course,” she added.
Wynn Resorts is the parent of Macau operator Wynn Macau Ltd, which runs Wynn Macau and Wynn Palace. The parent also has casino business in Las Vegas, Nevada, and Boston, Massachusetts, in the United States.
The CFO noted during the call that the firm had contributed US$356.5 million of equity to the Wynn Al Marjan Island project during the quarter, bringing its total equity contribution to date to US$514.4 million, split approximately US$300 million for Wynn Al Marjan and a little over US$200 million for what she termed “the Marjan land bank and related infrastructure”.
Craig Billings, chief executive of Wynn Resorts, explained during the update with analysts that having “just returned from several weeks” in the UAE, he had observed that construction on the Wynn-branded property was “rapidly progressing… with work now approaching the 15th floor of the hotel” portion.
Of the nearly US$357-million in equity contributed by Wynn Resorts to the UAE joint venture in the second quarter, the transaction included “the purchase of our 40 percent pro rata share of all 155 acres [62.7 hectares] of Island 3, the island on which Wynn Al Marjan sits,” said Mr Billings.
That was a reference to the fact Al Marjan is a land reclamation scheme.
He stated: “As a result, our joint venture now owns not only the land under Wynn Al Marjan, but also 70-plus acres of land for potential future development on the island.”
The CEO further noted: “Of course, we have banked land before in the U.S. and Macau, and we are confident that acquiring this sizable Al Marjan land bank will prove valuable over the long term.”
UAE regulator comfort, Macau opex down
He added: “As I have noted before, I believe the UAE is the most exciting new market for our industry in decades and our confidence in the demand and EBITDA [earnings before interest, taxation, depreciation, and amortisation] potential of Wynn Al Marjan continues to grow.”
CBRE Capital Advisors Inc said recently the venture could generate US$1.4 billion annually in gross gaming revenue (GGR).
Mr Billings said the group was “delighted” with the recent news that the official website for the UAE’s gambling regulator – the General Commercial Gaming Regulatory Authority (GCGRA) – had gone live to the public. The body has also announced the federal nation’s first-ever lottery licence.
Mr Billings stated in his Tuesday remarks: “The members of that body are some of the luminaries of the industry and very, very experienced regulators. The establishment of the GCGRA creates – hopefully creates – incremental clarity for investors and financing sources.”
The CEO added: “You’ll also note that they recently awarded a lottery licence for the UAE, and I think that … gives folks comfort.
“I assume that they will be moving forward next; to the next step in our licensure. I don’t have a specific timeline for you, but you can see all the momentum that’s happening there.”
In commentary on the Macau market, Ms Cameron-Doe noted that daily operating expenses at Wynn Macau Ltd were down by about a fifth in the second quarter, relative to the pre-pandemic second quarter 2019.
She stated: “Our opex [operating expenses], excluding gaming tax were approximately US$2.5 million per day in the second quarter, a decrease of [circa] 19 percent compared to US$3.2 million in second quarter 2019, and down 3 percent on a sequential basis.”
The CFO added: “The team has done a great job of staying disciplined on costs, and we remain well-positioned to drive strong operating leverage as the market continues to recover.”
In terms of capital expenditure in Macau, Ms Cameron-Doe said the group was in the design and planning stages on several of its gaming concession-related commitments to the Macau government.
She said: “As we noted, [in] the past few quarters, these projects require a number of government approvals, creating a wide range of potential capex outcomes in the near-term.
“As such, we continue to expect capex related to our concession commitments to range between US$350 million and US$500 million in total, between 2024 and the end of 2025.”
In terms of the overall group’s balance sheet, she said liquidity “remains very strong”, with global cash and revolver availability of over US$3.9 billion as of June 30.
“This was comprised of US$2.2 billion of total cash and available liquidity in Macau, and US$1.7 billion in the U.S.,” said the CFO.
