MGM Osaka Financing Secured, Multibillion-Dollar Loan Historic in Japan

Posted on: April 24, 2024, 08:52h. 

Last updated on: April 24, 2024, 09:47h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The development group behind MGM Osaka this week secured its final financing component to bring the integrated casino resort to reality.

MGM Osaka Japan casino integrated resort
MGM Resorts International and Orix Corporation have their financing strategy finalized for MGM Osaka, a more than $8 billion development on Yumeshima Island. The partners this week secured the final $3.42 billion in financing needed to complete the project scheduled to open in 2030. (Image: MGM Resorts International)

MGM Osaka is a more than $8 billion development on the city’s Yumeshima Island, a man-made plot of land spanning about 700 acres. The integrated casino resort will occupy roughly 52 acres.

MGM Resorts International and Orix Corporation, a global financial services conglomerate headquartered in Tokyo, are equal 42.5% partners. The remaining 15% equity stake is controlled by several Japanese companies, including Panasonic, Kansai Electric, and West Japan Railway.

Japanese media outlet Nikkei reported Wednesday that MGM and Orix have secured a JPY530 billion (US$3.42 billion) loan from two banks based in Japan. The lenders are Mitsubishi UFJ Financial and Sumitomo Mitsui Banking.

Mitsubishi Financial is a subsidiary of Mitsubishi Group, the private conglomerate that’s best known in the United States for its electronics products and vehicles. The company’s financial unit is one of the world’s largest lenders and holding firms.

The financing completes the funding plan for MGM Osaka, a JPY1.27 billion (US$8.2 billion) enterprise.

Historic Financial Arrangement

According to multiple news reports in Japan, MGM Osaka’s $8.2 billion financing structure represents the richest co-financing agreement involving multiple banks in the country’s history. Construction on the project is expected to take over a half-decade, with MGM officials tentatively planning to open the destination in 2030.

MGM Osaka is the only casino project underway in Japan. When the country authorized as many as three casinos in 2018, Japan had the attention of the world’s major casino developers and operators. However, the country’s tedious regulatory path resulted in most folding on the Land of the Rising Sun.

MGM remained steadfast in its commitment to being Japan’s first casino operator. Its Osaka project will be unlike any other in the company’s history.

Yumeshima presents unprecedented construction challenges for MGM. Site prep cost $173 million, as laborers needed to install steel beams extending 230 feet down to reach bedrock.

With the land secured and ready for a sprawling resort, MGM broke ground on the development in December. The plan includes 2,500 hotel guestrooms, 400,000 square feet of convention space, and an array of attractions that “showcase the best of Osaka and Japan.” The casino floor is limited to 3% of the resort’s overall indoor floor space.

Weakening Yen

Japan’s yen fell on Wednesday to its weakest levels against the US dollar since 1990. A US dollar is currently worth nearly 155 yen, and that only helps MGM finance its project in Japan.

A strong dollar plays well into MGM’s hands, as the US-based company is partially funding its Japanese pursuit with its cash reserves and financing secured stateside.

The weakening yen is causing the overall cost of the project to decline for MGM. When MGM’s Osaka pitch was selected by prefecture government officials, the price tag for the integrated resort was estimated at around $10 billion. But with the yen down nearly 30% against the US dollar over the past five years, the cost has fallen about $1.8 billion.