June 19, 2024 3 min read

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Wynn Aims at Leading Cash Flow Margin amid Funding for UAE Project

While the development of Wynn Al Marjan Island continues, CBRE experts predicted that Wynn's free cash flow profile may meaningfully improve

Currently under development, Wynn Al Marjan Island, a new luxury resort located in Ras Al Khaimah, United Arab Emirates (UAE), represents an investment of $4 billion. Wynn Resorts’ share in that investment is approximately $900 million.

A newly released report acknowledged the importance of the project for the leading gaming and entertainment company, pointing to the future strength and cash flow improvements it may bring. The prediction came from CBRE Credit Research experts, Colin Mansfield and Connor Parks, who discussed the topic in a Tuesday note to investors, as announced by IAG.

In their note, the experts predicted that Wynn’s free cash flow profile is expected to “meaningfully improve.” CBRE’s researchers noted that the company’s free cash flow in 2026 is expected to hit $1.4 billion. “This forecasted 18% FCF (free cash flow) margin will be best-in-class within global gaming,” the expert analysts explained.

Considering the aforementioned predictions, annual shareholder returns and distributions of approximately $300 million are expected. However, Wynn’s stake in the massive gaming and entertainment project is expected to increase the cash flow for Wynn Macau.

We estimate Wynn Al Marjan Island will be de-leveraging to Wynn on a pro forma basis relative to our 2026 estimates, declining to about 4.2x gross lease-adjusted leverage at project maturity. This assumes proportional consolidation of Wynn Al Marjan Island’s project-level debt and adding $356 million in management fees and recurring distributions to EBITDAR,

explains a note from CBRE Credit Research experts

The Company Continues to Diversify Its Portfolio

The research analysts spoke about the current annual fees that Wynn’s properties generate which are between $280 million and $300 million. They said that even if “Wynn chose to fully debt fund its equity investment, consolidated leverage wouldn’t increase by more than 0.5x.”

The researchers spoke about the importance of the project in Ras Al Khaimah for Wynn. They explained that the new premium luxury and entertainment resort would help further diversify the operator’s portfolio in what was seen as an “attractive international jurisdiction.” This diversification complements Wynn’s growing global position, the CBRE note explained.

Earlier this month, CBRE released a new report called “United Arab Emirates: The next gaming frontier,” in which it spoke about the potential of the integrated resort project. The report predicted that Wynn’s Al Marjan Island project is expected to generate approximately $1.38 billion in annual gross gaming revenues.

At the same time, the experts hinted at the possibility of the project to have “operating margins to be more akin to Singapore than Las Vegas.” An important advantage of the project was that it has “virtually no competition,” according to the report.

Journalist

Jerome is a welcome new addition to the Gambling News team, bringing years of journalistic experience within the iGaming sector. His interest in the industry begun after he graduated from college where he played in regular local poker tournaments which eventually lead to exposure towards the growing popularity of online poker and casino rooms. Jerome now puts all the knowledge he's accrued to fuel his passion for journalism, providing our team with the latest scoops online.

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