MGM China Holdings Ltd., a venture between a daughter of casino mogul Stanley Ho and MGM Resorts International, received formal government approval to build its second resort in Macau. The stock surged.
The venture will pay a land premium of 1.29 billion patacas ($162 million) and annual rent of 2.15 million patacas to develop a five-star hotel and a casino resort, the government’s gazette said today.
The new project will give MGM China its first resort in Macau’s Cotai area, Asia’s equivalent of the Las Vegas Strip. The company joins other operators including Galaxy Entertainment Group Ltd. and Sands China Ltd. in expanding in the gambling hub, the only place in China where casinos are legal.
The lease will last for 25 years, the gazette said. MGM China made initial payments to the Macau government for the project, the company said in a statement to Hong Kong’s stock exchange in October. The formal approval allows the company to proceed with construction plans on the 71,833 square meter site.
MGM China, partly owned by Stanley Ho’s daughter Pansy, jumped 7 percent to HK$15.86 in Hong Kong for its highest close since August 2011. The benchmark Hang Seng Index rose 0.5 percent.
“The formal approval means everything is set for MGM China to move ahead,” said Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group.
The casino resort, which will include 1,600 hotel rooms, 500 gaming tables and 2,500 slots, will take as long as 36 months to build, according to a statement from MGM today. It will cost about $2.5 billion.
Galaxy, controlled by Hong Kong business tycoon Lui Che-woo, has said it plans to invest as much as $6.5 billion to expand the third phase of its existing resort in Cotai. The company expects to begin construction, which will cover about 929,000 square meters, at the end of this year or early next year.
Gaming revenue in Macau jumped 14 percent to a record 304 billion patacas last year.