CBRE Credit Research has described the ability of Wynn Resorts to self-fund its expected US$900 million investment into the Wynn Al Marjan Island development in the United Arab Emirates as a “non-issue” due to its strong cash position and anticipated cash flow improvements.
The research house has also described Wynn Al Marjan Island as potentially deleveraging to its parent due to its cash flow and Adjusted EBITDA contributions.
In a Tuesday note outlining the credit implications of Wynn Al Marjan Island for its parent, analysts Colin Mansfield and Connor Parks said strong internal liquidity sources and relative ease of cash movement throughout the enterprise affords Wynn the ability to self-fund the expected US$900 million equity investment into the US$4 billion UAE development.
Wynn outlined this investment level in May, CEO Craig Billings revealing an estimated 50/50 debt to equity split with Wynn chipping in 40% of the equity.
“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,” the analysts wrote in Tuesday’s note.
“This assumes proportional consolidation of Wynn Al Marjan Island’s project-level debt and adding US$356 million in management fees and recurring distributions to EBITDAR. Full consolidation is unlikely given Wynn owns 40%, but comfort should be taken in Wynn’s local partner (60% owner) being an investment grade sovereign.
“Wynn’s FCF (free cash flow) profile will meaningfully improve, estimated at US$1.4 billion in 2026 (net of dividends and minority distributions). This forecasted 18% FCF margin will be best-in-class within global gaming.”
These estimates, they said, assume around US$300 million in annual shareholder returns and distributions, but also increasing cash flows from its stake in Wynn Macau Ltd. Likewise, while Wynn Al Marjan Island’s equity ownership sits underneath Wynn Resorts and does not flow through Wynn Finance, “the parent’s access to Wynn Finance cash (and 72.2% of Wynn Macau’s) makes funding a non-issue.
“The parent already generates US$280 million to US$300 million in annual fees from existing properties,” CBRE said. “Even if Wynn chose to fully debt fund its equity investment, consolidated leverage wouldn’t increase by more than 0.5x.
“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.”
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