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Universal says US$268 million sale of land near Okada Manila on hold as COVID-19 halts casino momentum

The community quarantine measures imposed on Metro Manila since 15 March 2020 due to COVID-19 appear to have had wider consequences for Japan’s Universal Entertainment Corp with the purchasers of 36,610 square meters of land adjacent to its Philippines integrated resort Okada Manila showing signs of hesitation.

According to information contained within Universal’s results announcement for the six months to 30 June 2020, published Thursday, the company formally received a document from the “purchaser of non-current assets” requesting postponement in the transfer of ownership and payment for the assets. While Universal said both parties envision resuming economic activities once the Manila lockdown is lifted, it added that the parties are considering amendments to the land sale agreement previously executed.

While Universal didn’t provide any further detail on the land in question, it appears to refer to the sale of a plot of land covering more than 36,000 square meters, or almost 4 hectares, near Okada Manila by Universal subsidiary Eagle I Landholdings Inc in February for Php13.18 billion (US$268 million). The name of the buyer was not released at the time but it is known that Universal sees it as an opportunity for major international hotel brands to be developed nearby, effectively boosting room supply for Okada Manila.

Universal had previously outlined such plans as part of a proposed expansion of the property, stating in December that it intended to “collaborate with businesses with which we expect to have a synergy and entice major brand hotels.”

News of the postponement in transferring the land comes as Universal announced a 48.8% decline in net sales at Okada Manila in 1H20 to JPY16.10 billion (US$152.6 million) and an operating loss of JPY5.27 billion (US$49.9 million) – increased from JPY1.82 billion (US$17.2 million) in the first half of 2019 – as a result of the ongoing suspension of business. Adjusted segment EBITDA fell to a loss of JPY1.32 billion (US$12.5 million) from income of JPY5.26 billion (US$49.8 million) in 1H19.

Okada Manila’s figures were in stark contrast to group-wide results, where the sale of major pachislot titles helped push Universal to a profit of JPY12.67 billion (US$120.1 million) on a 24.9% increase in net sales to JPY65.65 billion (US$622.1 million).

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