MGM Resorts Increases Its Investment in MGM Osaka by 20%

MGM Resorts International announced that it has increased its projected investment in its integrated resort in Osaka, Japan, by 20%. The company remained unfazed by this decision, remaining very optimistic about the property’s potential performance.

The Increased Investment Is Due to Updated Spend Estimates

According to MGM’s announcement, which was made during its recent earnings call, the company has increased its investment from $2.5 billion to $3 billion shortly after finalizing certain contracts with its partners.

Speaking before company investors, MGM executives reasserted their conviction that the $9 billion property would generate as much as $2 billion in annual EBITDA. MGM Resorts therefore expects a double-digit returns percentage, despite its increased investment, saying that the finished resort’s success could exceed that of competitor Las Vegas Sands’ iconic Marina Bay Sands property in Singapore.

As for the increased investment itself, MGM’s chief financial officer, Jonathan Halkyard, explained that it is because of updated spending estimates during the final negotiations with contractors.

For context, most of MGM’s financial commitment ($2.75 billion) will secure its 42.5% ownership stake in the property, per its previous agreement with its local partner, ORIX. The latter will pay a similar amount for the same stake. In the meantime, the final 15% of the property will be split between smaller partners of the initiative, such as Kansai Electric, Panasonic, and West Japan Railway.

MGM’s CEO Says MGM Osaka Could Surpass Marina Bay Sands

CEO Bill Hornbuckle added that further variability in input costs is likewise possible, although MGM has so far done a good job of “building in contingency” into its budget for that possibility. He added that unlike other projects MGM has previously worked on, the MGM Osaka IR is already fully designed, meaning that no major changes to the cost are to be expected.

Together with our partners, we’re going to be looking as we go forward for opportunities to be as cost-efficient as possible in the construction.

Bill Hornbuckle, CEO, MGM Resorts International

The CEO added that MGM has hedged over 50% of its commitment in the forward yen market, hoping to secure favorable exchange rates.

In any case, the MGM leadership remained convinced that it would finish the MGM Osaka integrated resort on time. The property, which just held its groundbreaking ceremony, is expected to open in 2030.

Hornbuckle suggested that MGM Osaka is poised for success and might even overtake Singapore due to Japan’s much higher population and the fact that the MGM casino will have twice the number of slot machines.