The Wynn group’s US$5.1 billion Wynn Al Marjan Island integrated resort development in the UAE could become the single largest contributor to parent company Wynn Resorts’ bottom line, contributing free cash flow of over US$300 million annually and driving de-leveraging of up to 0.5x at property maturity, according to CBRE Credit Research.
In an overnight note, CBRE’s Colin Mansfield and Connor Parks described Wynn Al Marjan Island as a “credit positive” development that they view positively when looking through the impact to the consolidated Wynn credit profile.
This, the analysts explained, is because Wynn Resorts will benefit significantly from management fees and recurring dividends from its 40% equity ownership in the project.
In a recent investor presentation released by Wynn to coincide with an Analyst and Investor UAE Market Tour it hosted in Ras Al Khaimah, Wynn said it expects to generate at least US$110 million annually in management and license fees alone, and as much as US$230 million in its “High Case” scenario. It also calculated management fees plus its share of EBITDA as a low of US$265 million annually up to a high of US$460 million. Some analysts have described Wynn’s forecast as conservative.
Extrapolating further on what this means for the Wynn group, CBRE said overnight that, “Understanding how cash moves around the Wynn enterprise will become even more important once Wynn Al Marjan Island opens and begins paying fees and distributions.
“Both will accrue directly to the parent HoldCo (Wynn Resorts Limited), which is asset-light, un-levered and benefits from solid cash flows of management and licensing fees across the portfolio.
“Wynn Al Marjan Island could eventually be the largest payer of fees, signifying its importance for the equity narrative as it can directly fuel shareholder returns.
“The increased diversification and introduction to a new gaming jurisdiction is also viewed favorably, especially considering the market’s potential. Wynn Al Marjan Island should benefit from being the sole casino license for multiple years and will cater to an attractive cohort of gaming and non-gaming consumers.”
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