MGM's Increased Investment in Osaka Casino Project

Global casino operator MGM Resorts International has announced an increase in its equity commitment for the MGM Osaka project, which is set to be Japan's first integrated resort (IR) with a casino. The company's investment has now risen to JPY428 billion, equivalent to approximately US$2.99 billion. This development was shared by Jonathan Halkyard, the Chief Financial Officer of MGM Resorts, during a conference call with analysts following the release of the group's first-quarter results.

Mr. Halkyard stated, "We now have remaining about JPY392 billion to invest for our future 43.5-percent ownership stake" in MGM Osaka. He further elaborated on the project's financial outlook, saying, "Despite the increase driven by updated spend estimates as we finalised our negotiations with contractors, we still have a high conviction in a high-teens percentage return on this project and remain on time to open in 2030."

Details and Timeline of the MGM Osaka Project

The MGM Osaka project, described by MGM Resorts as a JPY1.27-trillion venture, is being developed at Yumeshima, an artificial island in Osaka Bay. A groundbreaking ceremony for the project was held on April 24, marking the official start of construction. The complex is expected to be completed in the summer of 2030, with the opening scheduled for around autumn of the same year.

MGM Resorts and Japan's Orix Corp are the primary partners in the consortium developing MGM Osaka, with several other Japanese businesses involved as minority investors. Mr. Halkyard explained the investment structure, stating, "Our partners Orix and then minority shareholders make up the balance of that. And then we have a JPY530-billion credit facility on the project."

He also outlined the timeline for MGM Resorts' contributions, saying, "We expect our contributions to occur over the next four years, including 2025, about US$600 million to US$700 million per year, along with our equity partners." He added, "Then the bank facility will kick in … in 2028 and carry the funding through to the opening in 2030."

To manage financial risks, Mr. Halkyard noted that the company had taken steps to hedge its investments, stating, "We have already hedged over half" of its commitments to the project in the "forward yen markets," in order "to lock in some of these favourable exchange rates." He further added, "So, we're all fully hedged through the middle of 2027 in terms of our equity contributions."

MGM Resorts and MGM China's Financial Performance

MGM Resorts International, the majority owner of Macau operator MGM China Holdings Ltd, reported its financial performance for the first quarter of 2025. The company's consolidated net revenues were US$4.28 billion, marking a decrease of 2.4 percent from the previous year. This decline was attributed to reduced net revenues at the Las Vegas Strip resorts and MGM China.

Net income attributable to MGM Resorts stood at US$148.6 million for the reporting period, compared to US$217.5 million in the first quarter of 2024. The company's consolidated adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) were US$637.1 million for the three months ending March 31, down from US$673.2 million in the prior-year quarter.

At MGM China, net revenue decreased by 2.7 percent year-on-year to US$1.03 billion in the first quarter of 2025, primarily due to a decline in casino revenue from main floor table games. Casino revenue for the January to March period was just under US$896.0 million, a 2.6 percent decrease from the previous year.

MGM China's adjusted EBITDA for the first quarter of 2025 was US$285.6 million, reflecting a 5.2 percent decline from the previous year. Bill Hornbuckle, the Chief Executive and President of MGM Resorts, commented on MGM China's performance, stating, "We were able to debut 10 new villas in MGM Macau … with another 18 opening by the end of the year." He also mentioned plans for MGM Cotai, saying, "At MGM Cotai, we are in the process of adding 60 new suites that are targeting a first quarter 2026 opening. These are new room products that will help support demand from our premium gaming customers."

Mr. Halkyard highlighted MGM China's operational efficiency, noting, "MGM China's EBITDA margin held at 28 percent due to strong operating expenses control, and other efforts to maximise the efficiency" of the group's assets. In April, MGM China secured a revolving credit facility with a group of lenders, making available up to HKD23.40 billion (US$3.02 billion). Mr. Halkyard described this facility as representing "approximately US$1 billion of increased capacity," extending MGM China's "maturities for four years, to 2030."

As of March 31, MGM Resorts had a total principal amount of indebtedness of US$6.5 billion, including US$3.0 billion related to MGM China.

Source: MGM’s pledge to Osaka casino project increased to US$3bln, says CFO, GGRAsia, May 1, 2025.

Posted by Wizard
May 07 2025