Melco Says City of Dreams Manila Review Advancing

Posted on: May 9, 2025, 05:00h. 

Last updated on: May 9, 2025, 05:00h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Company says process to dispose of interest in Philippines casino is progressing
  • No firm timeline given for official announcement

Melco Resorts & Entertainment (NASDAQ: MLCO) noted incremental progress has been made on the operator’s strategic review of alternatives for its City of Dreams Manila casino hotel.

Melco stock
Melco’s City of Dreams in Manila. The operator said its strategic review of alternatives for the property is progressing. (Image: Wall Street Journal)

Geoff Davis, the chief financial officer of Lawrence Ho’s gaming company, made comments to that effect earlier today on Melco’s first-quarter earnings conference call. Davis responded to a question from Citi analyst George Choi regarding an update on the Manila strategic review.

So 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,” said Davis. “And over time we will whittle down that group to a short list for the bidding process. But we remain in close dialogue with our advisors and we’ll come back when there’s something to announce.”

In February, Melco announced it retained CBRE Capital Advisors, Inc. and Moelis & Company LLC as financial advisors “to assist in the process of exploring potential strategic alternatives for City of Dreams Manila.” The company didn’t identify operators that have signed NDAs indicating interest in the Philippines integrated resort.

City of Dreams Manila Could Be Appealing to Select Buyers

City of Dreams Manila has some favorable traits, including being cash flow-positive and profitable, that could make it appealing to prospective buyers, but there are also headwinds to consider.

City of Dreams Manila generates cash flow for the parent company, it’s not a compelling long-term asset for Melco to retain because it lacks growth drivers and competition in that market is rapidly increasing. More regional competition could be on the way if Thailand approves casino gaming and if Japan opts to add two more integrated resorts.

In the first three months of this year, the Melco venue in the Philippines posted solid earnings before interest, taxes, depreciation, and amortization (EBITDA), though those numbers declined on a year-over-year basis.

“For the quarter ended March 31, 2025, total operating revenues at City of Dreams Manila were US$101.6 million, compared with US$110.7 million in the first quarter of 2024,” according to a statement. “City of Dreams Manila’s Adjusted EBITDA was US$30.1 million in the first quarter of 2025, compared with Adjusted EBITDA of US$37.8 million in the comparable period of 2024. The year-over-year decrease in Adjusted EBITDA was primarily a result of softer mass market performance.”

No Talk of Possibly Divesting Cyprus Casino

In January, Vitaly Umansky of Seaport Research Partners said Melco should consider divesting its interests in its Cyprus and Philippines properties as avenues for raising cash and potentially focusing on a Thailand bid.

City of Dreams Mediterranean is the operator’s casino hotel in Cyprus, but Melco hasn’t mentioned the possibility of selling its stake in a property that’s been hamstrung by military conflicts in Europe and Israel.

“City of Dreams Mediterranean and Cyprus achieved 10% year-over-year growth in property EBITDA for 1Q 2025, despite the continued noise in the region,” said Ho on the conference call. “The property is starting to ramp up and with forward bookings for the upcoming summer period materially higher than what we had this time last year. We are optimistic about the results that Cyprus can deliver over the rest of the year.”