Review of City of Dreams Manila Progressing, According to Melco
Updated Article:
Posted on: May 9, 2025, 05:00h.
Last updated on: May 9, 2025, 05:00h.
Todd Shriber @etfgodfatherRead MoreFinancialGaming BusinessMergers and Acquisitions Melco Resorts Progressing in City of Dreams Manila Sale*
- *No definite timeline for announcement
Melco Resorts & Entertainment (NASDAQ: MLCO) has been making progress on its strategic review of alternatives for its City of Dreams Manila casino hotel. Geoff Davis, the chief financial officer of Lawrence Ho's gaming company, confirmed the advancements during Melco's first-quarter earnings call in response to a question from analyst George Choi regarding an update on the Manila strategic review.
The process is ongoing, Davis stated, with potential buyers signing non-disclosure agreements (NDAs) and working through a series of questions in a virtual data room[1][2][3]. The company aims to gradually reduce the group of potential buyers for the bidding process. However, no specific deadline has been given for the announcement of a deal[1][3].
In February, Melco announced it retained CBRE Capital Advisors, Inc. and Moelis & Company LLC as financial advisors to aid in the process of exploring potential strategic alternatives for City of Dreams Manila[2]. The company has yet to reveal any specific operators that have shown interest by signing NDAs.
City of Dreams Manila: Appealing to Certain Buyers
City of Dreams Manila offers several appealing qualities to prospective buyers, including being cash flow-positive and profitable. Nevertheless, there are factors that may be giving buyers pause[1].
The asset is valuable as it generates cash flow for Melco, but it may lack long-term attractiveness because it lacks growth drivers[1]. Additionally, competition in the Manila market is escalating rapidly, with the possibility of increased regional competition if Thailand legalizes casino gaming and Japan adds additional integrated resorts[1].
In the first quarter of this year, the Melco venue in the Philippines posted solid earnings before interest, taxes, depreciation, and amortization (EBITDA), although those numbers declined year-over-year[2].
*"City of Dreams Manila reported total operating revenues of US$101.6 million for the first quarter of 2025, compared to US$110.7 million in the first quarter of 2024. Adjusted EBITDA for the same period declined from US$37.8 million in the previous year to US$30.1 million in 2025, primarily due to a decrease in mass market performance."
No Mention of Selling Cyprus Casino
In January, Vitaly Umansky of Seaport Research Partners proposed that Melco should consider divesting its interests in its Cyprus and Philippines properties as a way to generate cash and potentially focus on a Thailand bid[2]. However, Melco has yet to publicly discuss divesting its stake in City of Dreams Mediterranean, its casino hotel in Cyprus, which has been somewhat affected by ongoing conflicts in Europe and Israel[2].
Ho noted on the conference call that Cyprus achieved 10% year-over-year growth in property EBITDA for the first quarter of 2025 and that forward bookings for the upcoming summer period are higher compared to the same period last year. He remains optimistic about the property's potential performance throughout the rest of the year[2].
[1] (https://www.insidermonkey.com/blog/melco-resorts-entertainment-mlco-progressing-disposal-philippines-casino-resort-343804/)
[2] (https://www.msn.com/en-us/money/companies/melco-city-of-dreams-manila-potential-strategic-alternatives-being-explored/ar-AA15zjIv)
[3] (https://www.marketwatch.com/story/melco-to-explore-strategic-alternatives-for-city-of-dreams-manila-2021-02-17)
- Todd Shriber, known as etfgodfather, delves into the financial aspects of the gaming business, focusing on the progress of Melco Resorts' mergers and acquisitions in City of Dreams Manila.
- Geoff Davis, Melco's CFO, mentioned during the first-quarter earnings call that potential buyers are working through a series of questions in a virtual data room, hinting at a potential sale.
- The City of Dreams Manila, while cash flow-positive and profitable, may lack long-term attractiveness due to the absence of growth drivers and increasing competition.
- In the first quarter of 2025, City of Dreams Manila reported a decline in adjusted EBITDA compared to the previous year, primarily due to a decrease in mass market performance.
- Melco, however, has yet to publicly discuss divesting its stake in City of Dreams Mediterranean, its casino hotel in Cyprus, despite proposals suggesting such a move to generate cash.
- Despite ongoing conflicts in Europe and Israel affecting its Cyprus casino, Melco remains optimistic about the property's potential performance throughout the rest of the year.