U.S.-based MGM Resorts International, the parent of Macau casino operator MGM China Holdings Ltd, has enough “flexibility to pursue several large-scale developments in the medium-term,” says CBRE Capital Advisors Inc.
“This includes potential opportunities domestically in New York and internationally in Japan and the UAE [United Arab Emirates],” wrote analysts Colin Mansfield and Connor Parks in a Monday memo.
Earlier this month, MGM Resorts announced an offering of US$850.0 million in aggregate principal amount of 6.125-percent senior notes, due in 2029.
The net proceeds from the offering are to be used to “repay indebtedness,” including the firm’s outstanding 5.750-percent senior notes due in 2025, and to “pay transaction-related fees and expenses, with the remainder for general corporate purposes”.
According to CBRE, the note offering “priced slightly tighter to the initial price talk of low-to-mid 6 percent and has traded up since issuance”.
“The issuance clears out the 2025 maturities at MGM’s domestic box, with the next maturity being the US$400 million due in late-2026,” the institution stated.
“Lease-adjusted consolidated leverage at MGM remains low at 4.3 times pro-forma for the issuance,” it added.
MGM Resorts is currently developing – as part of a consortium – the MGM Osaka casino resort in Osaka, Japan. The group is also developing a hotel project in Dubai, in the United Arab Emirates, where it expects to eventually be authorised to operate a casino there.
The casino firm has said it would in likelihood be in the run for one of three gaming licences in downstate New York.
MGM Resorts is also among the gaming operator brands that have shown interest in investing a casino project in Thailand, if that Southeast Asia nation legalises casino gambling. If realised, such investment would be done via MGM China, said Bill Hornbuckle, chief executive and president of MGM Resorts, in the company’s second-quarter earnings call.
CBRE said in its Monday note that each casino resort development would “require multi-billion dollar investments and sizeable equity checks, though MGM can fund these via free-cash-flow depending on their ultimate timing”.
It added: “MGM also has balance sheet flexibility should it partially debt-fund some of their equity checks if any licence payments and construction timelines meaningfully overlap.”
