Rumours that the Macau government has imminent plans to take back the land assigned for Macao Studio City on Cotai may have been overplayed, suggests a source familiar with the funding of the project.
The source said: “It is correct that a letter was recently sent to the partners by the government explaining that the return of the land was an option, but my understanding is that there were 30 other letters sent at the same time to companies in similar positions.
“The whole exercise may have been more geared towards residential properties rather than gaming, Cotai and MSC in particular. A big issue at the moment in Macau is the provision of social housing. Some developers have land for residential projects on the understanding they would include social housing. In some cases the government is saying: ‘Where is the social housing?’
“I’m not saying that the government is not looking at the issue of the lack of movement on MSC, or that the government won’t take back the land. But I certainly don’t think it’s going to happen imminently as suggested in some media reports,” added the source.
New Cotai LLC, one of the MSC partners, is probably better placed to stay in the Cotai game than Hong Kong-listed eSun Holdings. New Cotai’s financial backers are US hedge funds Oaktree Capital Management and Silver Point Capital. Oaktree is one of the biggest hedge funds in the US, controlling US$76 billion in assets. Oaktree also appears to have a good relationship with the central government in Beijing and was recently invited to work with the China Investment Corporation, a wholly owned state company with RMB1.55 trillion in working capital.
But if MSC were out of the equation, who would be the most logical suitors for that prime site? SJM already has a gaming licence it could use to develop the property. LVS has its hands full with Cotai Five and Six. Wynn might be another possibility. MGM already has a site reserved behind Cotai Five and Six and currently has its hands full tidying and strengthening its balance sheet following the major spending on CityCenter in Las Vegas. Melco Crown Entertainment doesn’t want the land taken away from MSC because technically that’s an MPEL project under MPEL’s own sub concession (purchased from Steve Wynn for US$900 million). MSC is part of MPEL’s future story to sell to the company’s investors.
