Operator News

MGM has enough ‘balance sheet flexibility’ to take on multiple mega projects across the world

CBRE Credit Research has said that despite MGM Resorts beginning land prep works for its almost US$10bn IR in Osaka, Japan, it still has enough financial muscle to embark on projects in Thailand, the United Arab Emirates and New York.

MGM’s development in Japan is believed to be costing US$8.18bn, split between MGM and its partners in the project. MGM holds a 40 per cent share in that project, which is slated to be opening in 2030. The company is opening a $2.5bn three-hotel project in Dubai that will not feature a casino and has confirmed that any bid to build an IR in Thailand will go through its Macau subsidiary MGM China. IN new York. In New York, it is hoping to transition Empire City Casino by MGM Resorts into a world-class entertainment destination, MGM Empire City, if awarded a commercial casino license for its historic Yonkers, New York site. 

MGM is issuing US$850m of 6.125 per cent of unsecured notes due 2029, with CBRE saying the operator’s lease-adjusted consolidated leverage is still low at 4.3x pro forma giving it greater flexibility to commit to mega-scale development projects.

Analyst Colin Mansfield said that the removal of that debt ‘clears out the 2025 maturities at MGM’s domestic box, with the next maturity being the $400 million due in late-2026.’

“Lease-adjusted consolidated leverage remains low at 4.3x allowing MGM to pursue several large-scale developments in the medium-term. Management also expressed its interest in pursuing a development in Thailand, which could be pursued out of the MGM China entity. Each development would require multi-billion dollar investments and sizeable equity checks, though MGM can fund these via FCF (free cash flow) depending on their ultimate timing. That said, MGM also has balance sheet flexibility should it partially debt-fund some of their equity checks if any license payments and construction timelines meaningfully overlap,” Mr Mansfield wrote.