Investment analyst reports Wynn capable of financing UAE casino resort independently.
Wynn Resorts (traded as WYNN on NASDAQ) possesses the financial means to finance its share of the Wynn Al Marjan Island integrated resort, located in Ras Al Khaimah, United Arab Emirates (UAE).
In 2021, the gaming company, with a minority stake in the project, projected expenses of $900 million, accounting for a total estimated cost of $4 billion. The local UAE partners are Marjan LLC and RAK Hospitality Holding LLC., with Wynn Design and Development handling creative and design operations. As mentioned in a note to clients on Tuesday, CBRE Credit Research analysts Colin Mansfield and Connor Parks believe Wynn can pay off the $900 million without acquiring excessive debt.
Estimates indicate that Wynn Al Marjan Island will be allocating a lower share of debt to Wynn relative to 2026 projections, reducing to about 4.2x gross lease-adjusted leverage at project maturity, according to the analysts.
Although UAE regulators have yet to authorize casino gaming, the construction of Wynn Al Marjan Island has already commenced, aiming for an early 2027 opening. It's predicted that the hotel tower will be completed as early as late 2025.
Wynn UAE Casino Could Enhance Free Cash Flow
There are concerns about potential casino resorts being approved in multiple UAE locations, including one proposed in Dubai, and its potential impact on the Wynn venue. However, Wynn Al Marjan Island could benefit from first-mover advantages.
Furthermore, the property is anticipated to be profitable. In early October, CBRE projected that when Wynn Al Marjan Island begins operation, the property could generate net revenue of $1.8 billion, gross gaming revenue (GGR) of $1.38 billion, and earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) of $921 million.
“Wynn’s FCF (free cash flow) profile is set to significantly improve, with an estimated $1.4 billion in 2026 (adjusted for dividends and minority distributions), representing an 18% FCF margin, best-in-class among global gaming companies,” amplified the analysts.
Notably, even though it's improbable that the Las Vegas-based gaming company will gain full ownership of the UAE scheme, it's worth mentioning that its local partner holds an investment-grade sovereign credit rating.
Wynn UAE Casino May Be Credit Positive
As mentioned earlier, Wynn needs to contribute $900 million to develop Wynn Al Marjan Island, and such expenses could potentially strain any company's credit standing. Nevertheless, CBRE's Mansfield and Parks don't foresee the UAE project driving leverage significantly.
Additionally, Wynn generates annual licensing fees ranging between $280 million to $300 million from its existing properties, figures that could increase with the addition of the UAE casino hotel.
“Qualitative credit characteristics for Wynn are expected to improve if our forecasts on the UAE regulatory structure and Wynn Al Marjan Island’s earnings potential come true. Wynn will add a high-quality property to its portfolio in an appealing international location, further enhancing its already robust global diversification,” concluded the analysts.
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