MGM inks contract for Cotai Project | Yogonet International
It will be the firm’s second property in Macau

MGM inks contract for Cotai Project

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(Macau).- MGM China Holdings has inked a us$ 1.35 billion contract with the China State Construction Engineering group to act as the main contractor of its Cotai project. The deal, signed on June 7, was made public yesterday in a filing to the Hong Kong Stock Exchange. The developer says it is the largest wholly conducted contract in its history.

The filing states that the construction works are anticipated to start on or around January 2014 and to be completed by April 2016. The operator’s plan is to build a gaming resort with approximately 500 gaming tables, 2,500 slot machines and 1,600 hotel rooms. This is subject to government approval. The ground breaking for the new resort took place in February.

Currently, the project has a budget of us$ 2.6 billion.

Lately, analysts are giving the company credit for its fundamentals on the Strip. J.P. Morgan gaming analyst Joe Greff recently conducted investor meetings with MGM Resorts representatives, including CFO Dan D’Arrigo. The mood was upbeat as management said booking levels and spending levels at the company’s Strip resorts have improved.

Greff, in a research note after the meetings, said the newly opened Hakkassan nightclub and restaurant inside MGM Grand is driving 18 % to 20 % visitation levels to the property. The us$ 100 million attraction, built at the front of MGM Grand with an outdoor balcony that overlooks the Strip, is also driving increased spending by customers throughout the resort, Greff said.

Now, with Dubai World — the investment arm of the Persian Gulf emirate — floating the possibility of selling its 5.3 % stake in MGM Resorts and its half of CityCenter, the development has become even more attractive. MGM Resorts plans to spend us$ 300 million to us$ 350 million this year to upgrade hotel rooms and other amenities at several Strip hotel-casinos.

Part of the budget includes an outdoor entertainment and retail district between New York-New York and Monte Carlo with a park area and plaza that leads into the company’s planned 20,000-seat arena that will be built behind the two resorts. “Management was excited about the district,” Greff said.

But Wall Street is still excited about Macau, where MGM Resorts is building a 1,600-room hotel-casino that is expected to open in 2016. The property will be a sister resort to the 600-room MGM Grand Macau.

MGM Resorts restructured its Macau ownership, taking a controlling 51 percent stake when the company created a publicly traded subsidiary on the Hong Kong Stock Exchange.

“Management was confident that its (MGM Grand Macau) could exhibit 2013 growth in line with marketwide growth rates,” Greff said.

Analysts expect Macau gaming revenue, which hit a record us$ 38 billion in 2012, to increase from 14 % to 18 % this year.

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