Thursday, June 25, 2009

Pubs prove attractive to investors, by Natalie Craig - The Age - 25th June 2009

Three Melbourne pubs leased to a Woolworths-backed company have been sold for more than $16 million in heated auctions at Crown Casino.

The Elsternwick Hotel in Elwood, the Rose Shamrock & Thistle in Reservoir and the Rifle Club Hotel in Williamstown sold separately to three wealthy individuals - one from Sydney and two from Melbourne.

Agents say the buyers were attracted by the "blue-chip" tenant, Australian Leisure & Hospitality Group, in which Woolworths has a 75 per cent stake. Melbourne publican Bruce Mathieson owns the remainder.

The pubs sold on investment yields as low as 5 per cent, prompting agents to speculate that private buyers, disgruntled by sharemarket and banking returns, are now prepared to pay more for pubs - relative to their rental income - than in previous months.

Vendor ALE Property Group, Australia's largest listed pub owner, reaped a 24 per cent premium on the pubs' book values at December 31.

ALE managing director Andrew Wilkinson said it was a "particularly strong" result in a "difficult market".

He said the sale last week of two of its Sydney pubs for $12 million - slightly more than book value - fuelled interest in the Melbourne sales. "Sydney set a benchmark and in the past week investors have been digesting that and knew that they'd have to turn up in Melbourne with a very sharp price."

The sales by ALE come as rival pub owners are expected to start flooding the market with sales. About 200 pubs in NSW are believed to be in breach of their lending covenants, with banks already pulling the plug on owners such as Winners Circle Group.

In Melbourne, the Cornerstone group needs to sell several of its assets after appointing administrators to deal with debts racked up during a buying frenzy at the top of the market in 2007.

ALE told the stock exchange it would "apply the proceeds of the sale to both debt reduction and to increase surplus cash balances". Mr Wilkinson said ALE was not a forced seller, and "at this stage" had no more plans to sell.

"We've got no refinancing coming for another two years, at least. From our point of view, our finances are in good shape … In this market, people are gravitating towards lower-risk, long-term, good-quality properties."

Agents were happy with the auction turnout but were reluctant to call a widespread recovery in pub sales, emphasising instead the rarity of what was on offer.

Scott Callow and Joel Fisher, of CBRE Hotels, jointly marketed the hotel portfolio with Raoul Holderhead and Dean Venturato of Burgess Rawson.

"The strength in the hotel investment market has been proven by this result … a number of private parties were bidding feverishly," Mr Callow said. "Quality assets are continuing to attract strong interest, given the lack of prime hotels available in the current market."

Each pub sold with 19-year leases to ALH, indexed to inflation, with options to renew for four 10-year terms. (Credit: The Age)

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Monday, June 22, 2009 launches first-of-its-kind Australian iPhone application for house hunters launches first-of-its-kind Australian iPhone application for house hunters

Monday 22 June 2009: Online property site has today launched a free* iPhone application through the Apple iPhone App Store.

The application is the first-of-its-kind in Australia. It makes searching for a property easier for Domain users, who can now search for properties to buy, rent and share in the paper, online, via their mobile and now within an iPhone application.

For real estate agents and property vendors, the iPhone application offers greater exposure for property listings, particularly while house-hunters are actively in the process of pounding the pavements.

Anthony Ishac, spokesperson, comments “The iPhone application is one more way which Domain provides our agents with unique reach and unmatched support.”’s free iPhone application gives iPhone users the ability to:

Select criteria and search thousands of properties Australia-wide;
View property listings and photo galleries;
Shortlist favourite properties to view online or offline;
Check open for inspection times as well as auction dates and times;
View mortgage calculations for each property;
Email or call the agent/advertiser directly from the iPhone

This is Fairfax Digital’s first iPhone application developed in-house. It was created by the company’s newly-established Future Services team, which is tasked with creating innovative technologies to further extend the accessibility and convenience of Fairfax Digital’s sites, including its mastheads, and online classifieds such as

Anna Cicognani, Chief Product Officer, Fairfax Digital, comments, “This first product from the Fairfax Digital Future Services team is a sign of things to come. We are actively investing in innovative technologies to meet immediate and future consumer needs, as well as add demonstrable value to our partners’ businesses.

Sponsored by the Commonwealth Bank, the iPhone application complements’s existing mobile site for 3G enabled phones ( as well as its iPhone-ready mobile site. For more information and a video demonstration, visit:

The application is available from the Apple iPhone App Store today. To download the application, just open the App Store on your iPhone or access the App Store directly from iTunes on your computer and search for or visit

* Please note that while the Domain iPhone application is free to download via Apple iTunes and the Apple App Store, users may incur fees as per their standard mobile or internet network charges for "data retrieval".

- ENDS -

Part of the Fairfax Digital network, is an indispensable source of national property listings and resources for Australian property buyers, sellers and renters. With a vast network of real estate agents Australia-wide, contains the constantly refreshed information people need to make smarter property decisions.

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North Bondi clubhouse rescue, by Sharon Labi - The Sunday Telegraph - 21st June 2009

Australia's most famous beachfront is set for a $6 million makeover with plans to build a new surf club.

Despite being stripped of a $1.7 million federal Government grant last year, North Bondi Surf Lifesaving Club has lodged plans with Waverley Council for a modern, white, three-storey building at the world famous tourist spot.

Opposition leader and local Wentworth MP Malcolm Turnbull - who has been a member of the club since childhood - has personally donated $100,000, while the state government kicked in $500,000 and Waverley Council $750,000.

Members and nippers have also been slugged a building levy to help fund the redevelopment. The existing club is riddled with concrete cancer and has no access for the disabled.

It also lacks adequate storage space for all its surfcraft.

Its replacement will have a basement storage area, a gym, a boat shed and a function room.

Club administration director Karen Scott said about half the needed money had been raised and members were not keen to borrow the rest.

She added: "We're not looking at rebuilding until we've raised all the funds. We're still fairly heavily involved in a fund-raising effort. That was put back pretty severely when the Federal Government stripped our grant.

The grant was awarded in 2007 by the previous Coalition government, but scrapped by Labor in last year's Budget.

The DA may be reviewed if the club cannot raise the balance. Waverley Mayor Sally Betts said council had set a benchmark of $750,000 for several of its surf clubs and it was unlikely council would give North Bondi any more money.

Mr Turnbull has said his father used to take him to the club before he could walk, and last year accused Regional Development Minister Anthony Albanese of pulling the grant to punish Bondi because it was in his electorate.

Once approved, the DA is valid for five years. The plans will be on display until July 17. (Credit: The Sunday Telegraph)

Saturday, June 20, 2009

Packer's $18m digs set for demolition, by Jonathan Chancellor - The Sydney Morning Herald - 20th June 2009

The billionaire James Packer and his wife, Erica, are understood to have spent $18 million on their first family property.

But neighbours do not expect them to be moving in until they demolish and rebuild the hillside Vaucluse holding.

Their disguised purchase was fronted by Matthew Csidei, a former housemate of Mr Packer, in an attempt to keep the vendor's price expectations as low as possible.

It was listed with $17 million-plus hopes through the agents Bill Bridges and Craig Pontey by the executors of the estate of the oil shale pioneer Sir Ian McFarlane, who died last year.

It comes with 2374 square metres of land - plenty of space for the Packers' 10-month-old daughter, Indigo, to enjoy a backyard away from the paparazzi.

The sale scuttles the entrepreneur Deke Miskin's hope that the Packers would buy the Point Piper harbourfront home Altona, in a deal where Mr Miskin would have secured Mr Packer's redundant Bondi Beach complex.

But there is still speculation that the Packers, who married in June 2007, may yet expand their Bellevue Hill holdings with the purchase of the 1890 property Leura, listed for $50 million.

Leura sits between Cairnton, Mr Packer's mother Roslyn's residence, and Winston, his sister, Gretel's house.

Any demolition of the Vaucluse house may cause controversy, as it is a landmark Guilford Bell house designed in the early 1970s for McFarlane.

Its proposed heritage listing by Woollahra Council was successfully opposed by McFarlane's solicitor, Robert Minter, in 2006.

McFarlane's valuer said heritage listing would diminish the property's value by $4 million, as the house's colonnade was an example of a style that was no longer popular. (Credit: The Sydney Morning Herald)

Tuesday, June 16, 2009

Chips down in Crown's Gateway, by Vanda Carson - The Sydney Morning Herald - 16th June 2009

Crown's Canadian casino joint venture with Macquarie Bank is in danger of breaching its banking covenants, credit rating agency Moody's has warned.

Moody's has downgraded the rating of Gateway Casinos and Entertainment by two notches to a level placing it in the category of companies "subject to a very high credit risk". The agency says Gateway may be forced to write down the value of its nine hotel-casino properties in western Canada.

It says the company's debt-to-earnings ratio is dangerously high at more than 10 times.

The Moody's rating now sits at Caa2, which is a junk rating in 17th position on a scale of 21.

Gateway has been cutting costs at its casinos since the start of the year, asking staff to take unpaid leave and forcing others to cut their hours.

But the response may not have been sufficient to alleviate the pressure of a hefty debt load.

While Crown and Macquarie Bank do not release details of the Canadian casinos' financial performance, it is believed that revenue is down by up to 20 per cent across its casinos, including two in Vancouver, one in Edmonton and six in the wider region of western Canada.

"Gateway's capital structure is not sustainable in its current form, and may require some form of restructuring that involves a level of impairment," Moody's said in a statement.

Crown paid $224 million for the share in the casinos at the top of the market in 2007. It has written down the value by $49 million and recorded a loss of $14.2 million in its December accounts.

Macquarie listed the Canadian investment as "held for sale" in its September half-year report. (Credit: The Sydney Morning Herald)

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Saturday, June 13, 2009

Tom Cruise, Katie Holmes to stay in Crown's most expensive suite - Herald Sun - 13th June 2009

Hollywood's most famous Scientologists, Tom Cruise and Katie Holmes, will live like royalty when they take up residence at Crown's most expensive hotel suite this month.

TomKat will be guests of owner and fellow Scientologist James Packer when Holmes comes to town to film the big budget thriller, Don't Be Afraid Of The Dark.

The couple will stay in the newly refurbished palatial top floor of Crown Towers.

The suite, which normally costs $27,500 a night and takes up the entire 39th floor, is being refurbished as part of the $50 million refit of Crown Towers.

As guests, Cruise and Holmes will have panoramic views of the city, a butler and nanny service on call 24 hours a day.

The suite features a private lift, four bedrooms, spacious marble-lined bathrooms, dining areas, huge walk-in robes, studies, lounges, kitchens and powder rooms.

The main bedroom is said to be bigger than an average suburban house.

The refurbishment is expected to be completed in time for the couple's arrival.

It is unclear if TomKat will be charged by their good friend and casino-owner, Mr Packer. Cruise and Holmes will join an elite group to have stayed in the suite.

Ranked among the most extravagant and expensive hotel suites in the world, Room 3918 has been used by some of the world's biggest gamblers.

Not even former US president Bill Clinton was able to dislodge high roller George Lu from Room 3918 back in 2001.

Mr Clinton was later heard to remark: "I must meet this man, George Lu."

Crown casino declined to return the Herald Sun's calls, requesting questions by email, which also went unanswered. (Credit: Herald Sun)

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Sunday, June 07, 2009

Crown hits jackpot with new tax deal, by Melissa Fyfe - The Age - 7th June 2009

The State Government's controversial deal with Crown Casino will add $41 million to the gaming venue's bottom line by 2015, according to a stockmarket analysis of the new arrangement.

A Deutsche Bank evaluation found that Crown will make more money from the deals 150 extra tables than it will lose from the State Government's tax increase.

After 2015, the deal will be worth an extra $10 million a year to Crown, the bank's analysts found.

Under the new arrangement — the biggest expansion of the casino in a decade — Crown's tax rate on its poker machines will lift from 21 per cent to 32 per cent in exchange for a boost to its gaming tables from 350 to 500.

Crown will also be able to double its poker tables within this limit and will no longer pay the $11 million-a-year levy that helped fund the state's health system.

The State Government wanted to change Crown's taxes following its reforms to the gaming industry, due in 2012. The deal, which locks in Crown's tax rates until 2022, was struck by Bruce Warner, a private negotiator hired by Treasury.

Mr Warner confirmed to The Sunday Age that billionaire Crown boss James Packer was present at several meetings during the 10-day negotiations earlier this year.

When the deal was announced last month, Gaming Minister Tony Robinson said that "Victorians would think this was a good deal" and Crown would think the deal was "less advantageous going forward".

But the Deutsche Bank report on the deal, by analysts Mark Wilson and Daniel Pi, describes the deal as a positive one for Crown, with an initial $10 million bottom-line loss in the financial years 2010 and 2011 changing to a $3 million net benefit in 2012, $19 million in 2013 and 2014 and a $10 million net benefit in 2015 and beyond.

The tax increase, the report said, "will be moderated by the roll-out of additional tables and the removal of the health benefit levy" (a tax on large gaming operators that helps fund the health system).

After claiming that the deal "virtually aligned" Crown's poker machine tax rates to those faced by its hotel competitors, the Government has now acknowledged that, after 2012, this will not be the case.

The machines in hotels most comparable to Crown's will be taxed at 50 and 58 per cent. In comparison, the casino's machines will face a 32 per cent tax on average monthly revenue. This means Crown gets a tax break on its poker machines of up to 80 per cent compared to its competitors after 2012.

Despite comments in Parliament last week about the deal aligning tax rates on poker machines, the State Government now says the deal is about aligning Crown's "overall tax rates" with its competitors.

Matt Nurse, a spokesman for the Treasurer John Lenders, said the Brumby Government has "effectively ended the tax break given to the casino, set up by the Kennett government, by virtually aligning the overall tax rates paid by the casino and the gaming operators".

Mr Nurse nominated another Crown tax, the super tax, as the reason the rates would be "virtually aligned". Under this tax, the casino must pay to the Government between 1 and 20 per cent on player losses of more than $880 million.

But Mr Nurse would not tell The Sunday Age how this tax may have changed under the deal or how much the Government collects under this tax. More details would be released, he said, when legislation came before Parliament.

Mr Lenders has said the Government stood to earn a $60 million tax windfall from the deal.

The deal has infuriated some of Crown's post-2012 competitors, the Australian Hotels Association and Clubs Victoria. "We would be delighted if the Government gave us the benefit it has given Crown — we would love to lock in our tax rate for 13 years," said the AHA's Victorian chief executive Brian Kearney.

Crown spokesman Gary O'Neill had no comment on the Deutsche Bank analysis. (Credit: The Age)

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Tuesday, June 02, 2009

James Packer's Macau dream rocks on, by Andrew Carswell - Herald Sun - 2nd June 2009

His fortune may have shrunk by billions of dollars but James Packer has opened the doors to what is arguably his biggest gamble yet.

Amid fanfare and fireworks, the first chips went down at the $2.9 billion City of Dreams - Mr Packer's second joint-venture casino to be built in Macau, the former Portuguese colony bordering southern China.

The increasingly reclusive billionaire stepped back into the spotlight last night to cut the ribbon to the new casino, alongside his chief partner in Melco Crown Entertainment, Lawrence Ho.

Christening one of its centrepieces, the Hard Rock Hotel, Mr Packer and Mr Ho smashed guitars hours before last night's celebrity-studded opening bash.

The City of Dreams stares directly across Macau's glitzy Cotai Strip at the Venetian, the world's biggest casino.

The property - almost 40,000 square metres - features 2000 gaming machines and tables, three hotels, a huge shopping, restaurant and entertainment precinct, and a spectacular multi-media attraction dubbed The Bubble.

"It is a crucial project," Lawrence Ho said.

"What is good for us . . . is good for our competitors and is good for Macau."

Experts believe there is much riding on the performance of the City of Dreams.

While Mr Packer has remained tight-lipped about the forecasts for the City of Dreams, Mr Ho has been brutally honest about the high-stakes game the men are playing in the middle of a global recession.

A poor reception for it may spell "the endgame for us," Mr Ho said last month.

"The investment case (for Melco Crown) basically comes down to how City of Dreams goes, so if you want to call it a sink-or-swim moment, well I guess it is," an analyst told BusinessDaily.

"Across the road you have the Venetian. That does about $500 million a year (in pre-tax earnings). The market is generally expecting City of Dreams to do $300 million. If it does that it's a success."

Since taking his late father Kerry's fortune above $6 billion, Mr Packer's net wealth has plummeted to $3 billion in the past year as shares in his divided kingdom - Crown Ltd and Consolidated Media Holdings - halved.

He is now only ranked the sixth richest Australian.

As well as Mr Packer staking much of his fortune on the venture, City of Dreams will be seen as an all-important test case for the future of Macau's gaming industry.

A 40-minute boat ride from Hong Kong, Macau now takes more gambling dollars than Las Vegas and Atlantic City combined.

But an attempt last year to stem the flow of visitors from mainland China dealt a dud hand to casino operators and put the brakes on the growth of the industry.

Mr Packer and Mr Ho hold a licence to build a third casino in Macau, but they remain publicly uncommitted to plans as yet. (Credit: Herald Sun)

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Packer bets big on Dreams of Macau, by Miriam Steffens - The Sydney Morning Herald - 2nd June 2009

As James Packer's $US2.4 billion ($A3 billion) City of Dreams casino opened with great fanfare in Macau last night, after more than three years under construction, it marked the biggest gamble for the 41-year-old billionaire in his global gambling expansion.

A lot is riding on the success of the 39,000-square-metre casino built on a former swamp in the gaming mecca.

It is designed to be the flagship of Mr Packer's Asian gambling empire which he is building with Lawrence Ho, son of the Hong Kong tycoon Stanley Ho.

At stake are not only about $US500 million Crown has invested in its 36 per cent shareholding in the venture, but Mr Packer's reputation as a businessman, which has been bruised as his wealth more than halved over the past year in the global financial meltdown and after a series of ill-fated US casino investments.

But the opening of the prestige casino, which features a shopping precinct, its own bubble-shaped theatre, and close to two dozen restaurants and bars, comes at a challenging time. Travel demand to Macau has been hurt by the world recession and headwinds from Beijing, which last year imposed new visa restrictions to limit the number of mainland Chinese gambling in the former Portuguese colony.

Macau's gambling revenue and visitor arrivals fell every month except one between January 2008 and April. Melco Crown Entertainment, the Packer-Ho venture, posted a first-quarter loss of $US35.3 million, down from a profit of $US43.2 million a year earlier, as the decline in visitors hurt revenues at its first Macau casino, the Altira, which opened in 2007.

City of Dreams, located opposite Las Vegas Sands' huge Venetian Macao complex, starts out with about 520 table games, 1350 gaming machines and two hotels — Crown Towers and the Hard Rock Hotel — with a combined 600 guest rooms. A third hotel with 800 rooms should be finished later this year.

That compares with 350 gaming tables and about 1000 hotel rooms at Melbourne's Crown Casino, which will be expanded to about 1600 rooms by mid-2010.


(Credit: The Age)

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Monday, June 01, 2009

Packer confident of his Macau gamble - The Australian - 30th May 2009

On Monday morning, James Packer will wake up in Macau to his moment of truth.

In the 3 1/2 years since the death of his legendary father, Kerry, Packer has transformed the family empire from one focused predominantly on media into the international casinos conglomerate Crown.

Monday's opening of Macau's City of Dreams casino -- one of the Chinese territory's most opulent and expensive -- is a crucial psychological marker on whether that transformation has been successful.

One of Packer's close confidants told The Weekend Australian this week the 42-year-old "always had a real belief in Macau and he's backed his belief". "City of Dreams is the culmination of that," the friend says. "It will be the jewel in the crown, in terms of size, of all of his casinos."

But with size comes risk. Packer has bet hundreds of millions of dollars of his money -- but more importantly his reputation as a major player on the international gaming scene alongside casino legends Stanley Ho, Steve Wynn and Sheldon Adelson -- on Macau.

Packer and Stanley Ho's son, Lawrence Ho -- his partner in the Melco Crown Entertainment joint venture behind the casino -- unveiled their plans for City of Dreams in the midst of an unseemly rush to develop a new Asian Las Vegas.

But today, such developments face pretty strong headwinds. In particular, gaming revenues in Macau are under pressure as the financial crisis and restrictions on Chinese citizens travelling to the former Portuguese colony bite. Even major players, such as the Las Vegas Sands, have reportedly delayed projects. Packer's fortunes have certainly fallen in line with the global crisis, with BRW magazine this week estimating his worth at $3 billion, down from $6.1 billion this time last year and the $7.3 billion he reportedly inherited from his father.

Still, Crown shares, of which the Packer family owns 36 per cent, have rallied strongly ahead of the City of Dreams opening. The run was spurred in part by Crown's escape from a proposed $US1.75 billion ($2.2 billion) takeover of Cannery Casino Resorts in the US. But one source close to Packer describes him as "quietly confident" about the future of City of Dreams. "I think we benefited from the fact there are a hell of a lot of cranes up there on unfinished projects," he says. "It is the only big new casino opening, and it will be the only one for some time."

The importance of Monday night's spectacular opening ceremony and first few months of trading are not lost on Melco Crown finance chief Simon Dewhurst. "City of Dreams is our flagship development," he says.

"It has consumed over 60 per cent of our investment capital and it represents our first opportunity in Macau to compete for the integrated resort middle ground that represents the future for the market. The opening of CoD marks the culmination of more than six years hard work. We are taking a transformational step from being primarily a development company, to being primarily an operating company."

Crown chief Rowen Craigie agrees the opening of City of Dreams represents "a major milestone". He says: "City of Dreams will be an exciting and attractive property and will benefit from being the only major casino entertainment complex to open in Macau in 2009."

City of Dreams, on Macau's popular Cotai strip, will be Melco Crown's second in the territory, following the opening of the $US760 million Crown Macau (now the Altira Macau) in 2007.

Analysts say City of Dreams is the first casino in Macau to break the $US2billion investment threshold. Its opening will be the culmination of a process that started before Kerry Packer's death when James settled on Macau as the first focal point of his global gaming ambitions.

In November 2004, Packer struck a joint venture agreement with the Hong Kong-listed leisure and entertainment group, Melco Development, run by Lawrence Ho. While there was little concrete announced at the time, it was soon made clear the joint venture company had big plans.

Once his father died in December 2005, Packer moved quickly to transform what was then the media-driven Publishing and Broadcasting Limited into a gaming empire. This transformation was highlighted late in 2006 with the top-of-the-market sale of PBL Media -- owner of the Nine Network and ACP Magazines -- to private equity firm CVC Asia Pacific for more than $5billion, just before the value of the assets started to decline amid both structural and cyclical change.

The PBL empire was left as largely a casino-focused one, and a subsequent split of the group in 2007 saw the casino assets hived off into the new casinos group, Crown.

But the move that signalled Packer's serious intent for gaming in Macau was his joint move with Melco just three months after his father's death to buy Macau's last available casino sub-concession from Wynn, the US casino entrepreneur, for $US900 million. The move cemented Packer and Ho as major players at the table of Macau's casino industry.

Altira Macau and City of Dreams are now held through Melco Crown Entertainment, which is listed on the Nasdaq index in the US and counts Crown as a 36.4 per cent shareholder.

Since 2006, Crown has also made a series of casino purchases independent of the Melco Crown venture in North America. These include stakes in the US-based Fontainebleau Resorts, Canada's Gateway Resorts group, Stations Casino Group and Harrah's Entertainment, underlining Packer's intense focus on gaming assets.

With the fall-off in casino values worldwide since the purchases, critics -- acting with the benefit of 20/20 hindsight -- have questioned the wisdom of his moves in both Macau and North America shortly before the global economic downturn. Even Crown's Rowen Craigie reportedly admitted earlier this year that the group had bought some of its US assets at the top of the market.

Crown's woes in the US were on full display in the company's interim profit result, with the group posting a reported net loss of $409.7 million due to a non-recurring $454.9 million writedown to the value of its minority US casino investments -- namely Fontainebleau, Stations and Harrah's.

But Packer's supporters assert that while there has been a fall in value of the US ventures in particular, he is well up on his Macau investments. After its $US45 million investment in Melco Crown's $US180 million capital raising this month, Crown has now invested a total of $US500 million in the group. That stake is now worth more than $US1 billion. Friends point out that Packer has effectively doubled his money and, in the process, gained a major say in a business that has two casinos fully funded, one of only six casino licences in Macau, and assorted hotels, retail complexes and entertainment venues supporting the casinos.

Melco Crown is not without problems. It booked a March quarter net loss of $US35.3 million, compared to a profit of $US43.2 million for the same period last year, prompting Ho to admit the casino market was not out of the woods yet. One analyst noted that Crown Macau had a "very poor opening" in 2007, with Packer's reputation suffering as a result. City of Dreams, he says, represents "a very critical moment".

Then again, Deutsche Bank last week raised its price target on Melco Crown from $US4.40 to $US6 a share, saying it was "now more confident on the success of City of Dreams after we walked through the property early this month".

City of Dreams certainly sounds impressive. Ho promises the water- and fantasy-themed complex will be a "next-generation resort like no other in Asia, or perhaps the world".

Located directly opposite the biggest casino in Macau -- the Las Vegas Sands Venetian Macau -- it will boast several distinctly branded casino floors, three world-class hotels and a shopping precinct to be known as The Boulevard.

On Monday, Melco Crown opens the first phase of that project, which will include the Crown Towers and Hard Rock hotels, 20 bars and restaurants, The Boulevard, plus a casino with 520 gaming tables (a third of which will be VIP) and 1350 gaming machines. It will be the only major casino to open in Macau this calendar year.

The casino's Bubble Theatre will feature a 10-minute "Dragon's Treasure" multi-media lights show. Theatre of Dreams, a 2000-seat theatre, will feature a Cirque Du Soleil-style water production when it opens in the December half. By December, the third hotel, the Grand Hyatt, will open, giving the complex a total of 1400 rooms. And there is even the future prospect of a further apartment development in the complex, subject to Macau regulatory approval. Melco's Dewhurst says Melco Crown is "very confident". He says: "We have spent a very significant amount of time, energy and resource into understanding what's working and what's not working throughout the market. We think City of Dreams is right."

Success for Melco Crown and City of Dreams will come down to a number of things. But one key measure will be foot traffic. "We expect that we will have something in the order of 35,000 guests a day passing through the property," Dewhurst says. "I have no doubt that we will have in excess of that number on the first day. In the first 100 days what's important for us is that on any of those 100 days we see that volume of traffic into the building."

In the current climate, that could be a challenge. Its performance will hinge on the recovery of the Asian economy -- and in particular how quickly Asian high-rollers return to the territory's casinos after the tough recent times.

Credit Suisse analyst Gabriel Chan said in a note last week that "with concerns about swine flu remaining vital, and signs that the recovery pace of the Chinese economy may have slowed, we see certain execution risks for the opening".

Indeed, visitor numbers to Macau, as recorded by the Statistics and Census Service, were down 3.5 per cent in April from the same period last year and steady over the previous month. Visitors from mainland China were down 13.5 per cent year on year.

Gaming revenues have suffered as a result of weaker visitor arrivals, but the pace of the decline has stabilised in the past few months. And there are hopes, from Ho down, for a swift rebound, partly driven by the buzz from the City of Dreams opening.

Some analysts believe that as Macau's most expensive casino, City of Dreams may be able to take market share from other players.

Janet Brashear, senior gaming analyst with US investment house Sanford C. Bernstein, says she expects City of Dreams to "make a splash, garnering $US1.4 billion in gross gaming revenues in 2010 and a 10 per cent share of the market". She also predicts City of Dreams could cannibalise the market share of some of its competitors in Macau, such as the Venetian Macau and Wynn resort.

For analysts, success will come down to one thing -- City of Dreams achieving an earnings before interest, tax, depreciation and amortisation of about $US300 million in the first year.

"You look across the road at the Venetian and they're doing about $US120 million EBITDA a quarter -- $US500 million a year," says one analyst. "So you would have thought $US300 million would be achievable for City of Dreams."

If City of Dreams achieves better than that -- say $US500 million a year -- then it will be a strong position against its rivals. There is growing speculation that casino giant MGM may have to sell its Macau interests after US regulators raised concerns about its local joint venture partner, Pansy Ho -- the daughter of Stanley and brother of Lawrence. Las Vegas Sands is also looking to sell some plots.

One close Packer confidant is hedging his bets ahead of Monday's event. He says: "On the assumption that the Macau economy will start to improve, Melco and City of Dreams are going to be in a very good place." (The Australian)

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James Packer's biggest casino venture opens in Macau today - The Daily Telegraph - 1st June 2009

It is arguably James Packer's biggest and boldest venture, a key pillar in the man's grand plan of global gaming dominance. And it opens today.

It is the much-hyped City of Dreams, a colossal casino resort on Macau's glitzy Cotai Strip and the second instalment from Melco Crown (MPEL), the company jointly owned by Packer's Crown Limited, and Melco.

There is no disputing the fanfare with which the grandiose complex will open, but what is a hot topic is whether the venture will be a success.

The timing, amid a global meltdown and hampered by a forced slowdown of tourists entering Macau, is not helpful.

But it does have one key advantage. It is the only casino opening in Macau this year, after much-larger projects were postponed.

One gaming analyst told The Daily Telegraph the City of Dreams "was a sink or swim moment" for MPEL.

But UBS analysts believes product offering, and most surprisingly timing, will make City of Dreams a success.

"Against the context of limited supply growth, improving market revenue trends, and City of Dream's scale and product, MPEL is arguably in the right place at the right time," the analysts said in a report.

Melco Crown suffered an inglorious start to life in Macau with Crown Macau failing to attract the punters due to its location and public perceptions that the complex had Feng Shui design issues.

Recently reborn as Altira Macau, the complex has since flourished thanks to the significant revenue generated by VIP gamblers ferried in from Hong Kong.

MPEL does hold a licence to build a third casino complex in Macau, but has not committed to plans as yet. (Credit: The Daily Telegraph)

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