GGRAsia – MGM Osaka developer said to have waived ‘get-out’ clause

MGM Osaka developer said to have waived ‘get-out’ clause

Sep 09, 2024 Newsdesk Japan, Latest News, Top of the deck

Osaka IR KK, the consortium behind the MGM Osaka integrated resort (IR) in Osaka, Japan, is said to have waived its right to terminate the implementation agreement to develop the complex.

The information was reported by major newspapers in Japan, which said a formal announcement would be made on Tuesday (September 10).

Osaka IR KK is the entity including MGM Resorts Japan LLC – a unit of U.S.-based MGM Resorts International – and Japan-based Orix Corp, plus a number of other smaller local stakeholders.

MGM Osaka (pictured in a rendering) is a JPY1.27-trillion (US$8.90-billion currently) scheme that is scheduled to open in 2030, according to its promoters. The complex is to be built on Yumeshima, an artificial island in Osaka Bay.

The agreement signed with the Osaka authorities included the right for the IR developer to withdraw from the deal if certain conditions were not in place. These covered issues such as the tax regime, investment requirements, land improvements and tourist numbers.

As per the contract, if the developer had exercised its right to terminate the deal based on those conditions not being met, it would not have to pay any compensation.

According to GGRAsia’s Japan correspondent, a representative from Osaka IR KK said on Saturday that the consortium had “decided to waive the right to terminate the implementation agreement because all the major business conditions have been established” accordingly.

The person added that after forfeiting the termination right, the Osaka authorities will “hand over the land” to Osaka IR KK, so that construction can progress as per the announced schedule.

“Now that the decision has been made, it is almost certain that [the MGM] Osaka IR will be able to open in autumn 2030,” stated the developer’s representative.

The person said both the Osaka authorities and the developer expected the announcement would help “ease the anxiety” among associated businesses, such as construction companies and lenders.

In late July, on MGM Resorts’ second-quarter earnings call, Bill Hornbuckle, the group’s chief executive and president stated: “I just recently returned from Japan and that is moving along nicely. We are in the ground as we speak and we hope to start piling by May or June of next year, with a target date still of middle of 2030 for opening.”