Wynn Resorts Financially Prepared for UAE Casino Resort Project

financially prepared for a UAE casino resort project
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Wynn Resorts (NASDAQ: WYNN) possesses the financial capability to self-fund its portion of the Wynn Al Marjan Island integrated resort in Ras Al Khaimah, United Arab Emirates (UAE), according to analysts. This revelation underscores the company’s robust financial health and strategic foresight in expanding its global footprint.

Project Details and Financial Forecast

Wynn Resorts, a minority investor in the project, has earmarked $900 million for its share of the development costs, out of a total projected expenditure of $4 billion. Local partners Marjan LLC and RAK Hospitality Holding LLC are collaborating on the project, with Wynn Design and Development spearheading the creative and design operations.

In a note to clients, CBRE Credit Research analysts Colin Mansfield and Connor Parks highlighted Wynn’s ability to fund this investment without resorting to substantial new debt. “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,” wrote the analysts.

Although UAE regulators have not officially approved casino gaming, construction of Wynn Al Marjan Island is already underway, aiming for an early 2027 opening. The hotel tower could be topped off as soon as late 2025.

Financial Benefits and Market Impact

The prospect of multiple casino resorts in the UAE, including a potential site in Dubai, raises concerns about competition. However, Wynn Al Marjan Island is expected to enjoy first-mover advantages and become a profitable venture. Earlier this month, CBRE forecasted that Wynn Al Marjan Island 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 upon reaching full operation.

“Wynn’s FCF (free cash flow) profile will meaningfully improve, estimated at $1.4 billion in 2026 (net of dividends and minority distributions). This forecasted 18% FCF margin will be best-in-class within global gaming,” added the CBRE analysts.

Strategic Position and Credit Outlook

While Wynn Resorts is unlikely to control 100% of the UAE project, its local partner boasts an investment-grade sovereign credit rating, enhancing the project’s financial stability. The $900 million investment required from Wynn is not expected to significantly impact the company’s leverage, according to CBRE’s Mansfield and Parks.

Additionally, Wynn already generates $280 million to $300 million in annual licensing fees from its existing properties, with potential for increased revenue once the UAE casino hotel becomes operational.

“Certain qualitative credit characteristics for Wynn will improve should our views on the UAE regulatory structure and Wynn Al Marjan Island’s return profile come to fruition. Wynn will add a high-quality property to its portfolio in an attractive international jurisdiction, further improving its already strong diversification position globally,” concluded the analysts.

Conclusion

Wynn Resorts’ financial readiness to self-fund its share of the Wynn Al Marjan Island project highlights its strategic planning and solid financial health. The anticipated benefits from this venture, including enhanced free cash flow and improved credit outlook, position Wynn for continued growth and diversification in the global gaming industry. As the project progresses, Wynn Al Marjan Island is set to become a significant asset in Wynn’s expanding portfolio.