Global gaming giant MGM Resorts International has sufficient cash and balance sheet flexibility to pursue multiple new integrated resort developments at the same time, including potential opportunities in Thailand, the United Arab Emirates and New York, said CBRE Credit Research in a Monday note.
The commentary follows last week’s announcement by MGM that it would issue US$850 million of 6.125% unsecured notes due 2029, with proceeds to refinance its US$675 million of 5.75% notes maturing June 2025. MGM’s next debt maturity of US$400 million is now slated for 2026.
According to CBRE, MGM’s lease-adjusted consolidated leverage remains low at 4.3x pro forma for the issuance, providing flexibility to pursue several large-scale developments in the medium-term. These, noted analyst Colin Mansfield, includes potential opportunities domestically in New York and internationally in Japan and the UAE.
“Management also expressed its interest in pursuing a development in Thailand … which could be pursued out of the MGM China entity,” Mansfield wrote. “Each development would require multi-billion dollar investments and sizeable equity checks, though MGM can fund these via FCF (free cash flow) depending on their ultimate timing.
“That said, MGM also has balance sheet flexibility should it partially debt-fund some of their equity checks if any license payments and construction timelines meaningfully overlap.”
The analyst added that the additional US$175 million of cash added to the balance sheet via the recent issuance is “not needle-moving” given the company already has a substantial amount of liquidity on hand.
MGM Resorts recently began land preparatory works on the site of its near-US$10 billion integrated resort development in Osaka and, according to local media reports, has since forfeited its rights to withdraw from the project within the next two years.
The company has also confirmed that any pursuit of a Thailand integrated resort license would be driven by its Macau subsidiary, MGM China.
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