MGM Resorts Financially Equipped for Big Projects, Analysts Suggest

Earlier this month, the leading hospitality, gaming and entertainment company, MGM Resorts, announced it raised debt sale from $675 million to $850 million. The announcement signaled the company’s intentions to raise more money through debt than it initially anticipated.

That strategic move isn’t bad by any means, especially considering MGM Resorts’ solid performance and growth plans. Two analysts are also bullish about the operator’s performance and its future prospects.

The Gaming Company Posses Balance Sheet Flexibility

As announced by PlayNY, CBRE analysts Connor Parks and Colin Mansfield, were both optimistic about MGM’s current position. The duo outlined that the company is positioned well for large-scale projects, acknowledging its “balance sheet flexibility.”

CBRE’s experts pointed to the strategic sale of $850 million in corporate debt, saying that it “clears out the 2025 maturities at MGM’s domestic box, with the next maturity being the $400 million due in late-2026.” The experts added: “Lease-adjusted consolidated leverage at MGM remains low at 4.3 times pro-forma for the issuance.”

This otherwise means that the company can engage with big projects and even potentially overlap development. MGM has plenty of options when it comes to further growth and development, with plans in the United Arab Emirates (UAE), Japan, as well as in New York.

The Company Has Prospects in Japan, UAE and New York

MGM’s efforts in New York would involve its Empire City Casino which currently operates as a racino in Yonkers. However, if the company secures one of the three casino licenses expected to be awarded by the gambling regulator, it may consider revamping the location.

Contingent on securing the license, MGM would have to set aside some $500 million for fees and funnel more money toward the redevelopment of Empire City Casino. In case this happens, the venue may see its gaming floor expand, as well as the addition of further amenities, including hotel rooms. Estimates of the company previously have set a price tag of approximately $1 billion for the redevelopment of the racino into a Las Vegas-style casino.

Another major project for MGM is the first casino resort in Japan, an integrated resort development on Yumeshima Island in Osaka. The project represents a joint venture between MGM and Orix Corporation.

Expected to become a major tourist attraction, the project has a mind-blowing price tag of $9 billion with MGM holding a 42.5% stake in the new integrated resort. Recent local media reports suggested that the integrated resort is expected to open in 2030.

Besides the aforementioned projects, the company’s UAE development also represents a unique opportunity. MGM’s new property being constructed in Dubai currently doesn’t include a casino floor. However, if the regulations change, MGM may quickly adjust its plans and add a casino to the project.