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Two Macau land grants could be approved this year

7 Feb 2012

By Howard Stutz
MACAU -- A Macau government official said two applications for land grants on the Cotai Strip requested by casino operators could be approved this year.

Jaime Carion, director of the Lands and Public Works Bureau wouldn't say which companies would receive the land grants, the Macau Daily Times reported in its Monday editions.

Casino operators Wynn Resorts Ltd., MGM Resorts International and SJM, which is controlled by controversial Hong Kong billionaire Stanley Ho, have applied for land concessions on Cotai. Carion said the bureau might only be able to complete and approve two of the three applications by the end of 2012.

Union Gaming Group principal Grant Govertsen said in a research note to the firm's clients that the primary reason to approve only two of the applications this year is to intentionally stagger the timing of future development.

"It is also possible that the bureau truly is overwhelmed by the application process, not due to a lack of manpower, but rather due to shifting casino development scopes," Govertsen said. "Given the high stakes, we can certainly envision the operators continually enhancing their proposals to include amenities perceived to be the most likely to result in first approval."

In September, Wynn announced it had agreed to pay a premium for land next to the City of Dreams development and the Macau University of Science and Technology campus. Wynn Resorts Chairman Steve Wynn has said the company would start construction as soon as the land was granted. The Macau government, however, said the Wynn deal was not settled.

MGM Resorts has also targeted a Cotai Strip location for a hotel casino development.

SJM said in December its Cotai land grant was approved in principle, but the operator had not received any detail on the premium payment. SJM has said the larger piece of its plans for Cotai would be nongaming businesses.

JP Morgan gaming analyst Joe Greff told investors that Wynn was mostly likely one of the projects that would receive approval since the land premium is nearly complete and the project has design plans with a large nongaming component.

"Interpreting these comments (is) always difficult for us and even the operators themselves," Greff said. "We think Wynn's project would have a relatively easier time securing approvals. We also think MGM is far along in its development."

Wynn Resorts shares fell $2.15, or 1.87 percent, Monday to close at $112.83 on the Nasdaq Global Select Market. MGM Resorts shares fell 35 cents, or 2.44 percent, to close at $14.02 on the New York Stock Exchange.

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