Melco Reviews Progress on the City of Dreams Manila Casino Hotels Project

The company announced that its strategic process to divest its holdings and dispose of its interest in the Philippines is moving forward, specifically focusing on the transition of its premier casino hotels.

No firm timeline given for official announcement

Melco Resorts & Entertainment (NASDAQ: MLCO) has announced that it is making consistent progress with its strategic review regarding its City of Dreams Manila casino hotel. This review aims to evaluate possible alternatives for the property and could include inviting bids from potential buyers.

City development — Image by Brida_staright from Pixabay

Chief Financial Officer Geoff Davis articulated these points during Melco’s first-quarter earnings call, responding to a query from Citi analyst George Choi. He elaborated by stating, “We continue to run the process with the advisors. Potential buyers are signing non-disclosure agreements (NDAs) in the virtual data room and are working through a series of questions. Over time, we will narrow that group down to a shortlist for the bidding process. We remain in close dialogue with our advisors and will return with updates as they arise.”.

City of Dreams Manila Could Be Appealing to Select Buyers

City of Dreams Manila boasts several attractive qualities as an investment, including a positive cash flow and profitability. However, challenges loom as competition continues to rise within the southeast Asian gaming market.

Positive cash flow: Despite being cash flow-positive, the asset lacks strong growth drivers.
Market competition: Increased competition is imminent in the market due to potential casino developments in Thailand and Japan.

For the initial quarter of this year, City of Dreams Manila reported strong operational results with earnings before interest, taxes, depreciation, and amortization (EBITDA), although these figures represented a decline compared to previous years.

“For the quarter ending March 31, 2025, total operating revenues at City of Dreams Manila were US$101.6 million, compared to US$110.7 million in the first quarter of 2024,” the company detailed. “City of Dreams Manila’s Adjusted EBITDA was US$30.1 million in Q1 2025, compared to US$37.8 million in the same quarter of 2024. This decrease in Adjusted EBITDA is primarily attributed to softening mass market performance.”

No Talk of Possibly Divesting Cyprus Casino

In a previous January statement, Vitaly Umansky from Seaport Research Partners suggested that Melco should consider divesting not just from its Philippine operations but also its interests in Cyprus to raise capital. The City of Dreams Mediterranean property in Cyprus is under Melco’s management but the company has not indicated interest in selling this asset despite regional challenges and conflicts.

“City of Dreams Mediterranean and Cyprus achieved a 10% year-on-year growth in property EBITDA for Q1 2025, despite ongoing issues in the region,” noted Ho during the earnings call. “The property is starting to ramp up, and forward bookings for the upcoming summer period are significantly higher than last year’s. We remain optimistic about the outcomes for Cyprus in the upcoming year.”

In summary, Melco’s continued strategic review of City of Dreams Manila signifies potential opportunities for buyers due to the asset’s appealing cash flows and growing market interest. However, as competition intensifies within the regional gaming industry, buyers will need to consider the future growth prospects that this investment entails.