Mohegan’s Korean integrated resort INSPIRE will likely take “a few more quarters” to achieve positive EBITDA, but sufficient liquidity means the Mohegan group will not need to provide any further financial support, according to CBRE Credit Research.
In a note following a Mohegan Investor Day this week, CBRE analysts Colin Mansfield and Connor Parks said the property’s ramp is tracking slightly better than they had initially expected, with lifetime revenue at US$168 million since the property opened last November. The casino launched later in early February.
Inside Asian Gaming also reported earlier this week on some KPIs released by Mohegan during the Investor Day, including a three-fold increase in casino visitation from 10,771 in February to 30,729 in August and hotel occupancy climbed from 58.3% to 89.7% over the same period.
Providing further color, CBRE said that hotel occupancy is “pacing above 80% for fiscal 4Q and table game performance is likely better than we initially modelled.
“That said, we think EBITDA will remain breakeven to slightly negative in fiscal 4Q as the property continues to ramp, marketing is adjusted, and property awareness builds.
“Public data from a local competitor (Paradise City) shows that total table drop over the last three months is up 10% quarter-on-quarter, supporting the notion that INSPIRE is growing the overall market. In addition, inbound visitation to Incheon Airport is still growing thanks to Japanese, Hong Kong, and Chinese tourists.
“We continue to believe that INSPIRE can generate US$150 million of mature EBITDA, with low 30% margins, which is in-line with other APAC gaming margins (ex-Macau and ex-Singapore).”
The analysts added that Mohegan may look at refinancing its debt facility in relation to INSPIRE but that such discussions would likely be out on hold until early to mid-2025. More pressing, they noted, is refinancing group level debts and specifically outstanding notes ahead of their 2026 maturity.
“We came away [from the Investor Day] with continued conviction that Mohegan will be able to execute a comprehensive refinancing of the entirety of its US$1.7 billion in restricted group debt in the near-term,” said Mansfield and Parks. “Management stated they expect the refinancing to be leverage-neutral, despite their intention for a lower quantum of debt longer-term.”
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