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Wynn Drifts Lower After Sale and Leaseback for Boston Harbor Casino

Published 02/16/2022, 07:52 AM
Updated 02/16/2022, 08:06 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- Wynn Resorts Limited (NASDAQ:WYNN) stock fell in premarket trading on Wednesday after the casino operator signaled that the pandemic isn’t yet done with it.

Wynn said it will sell the land and buildings associated with its Encore Boston Harbor casino to the Real Estate Investment Trust Realty Income (NYSE:O) for $1.7 billion to free up capital after two years in which the casino business has been among the worst hit by health restrictions both in the U.S. and China.

Wynn’s rent for the Encore Boston Harbor will start at $100 million annually.

Wynn had spent $2.6 billion getting Massachusetts’ first casino up and running, but it was only able to operate for a year before the pandemic struck.

There were the expected signs of a rebound in business in Wynn’s fourth-quarter earnings, which were also released late on Tuesday. The company’s net loss declined to $177 million from $269 million a year earlier, but was still around 10% wider than expected at $1.37 a share. Adjusted earnings before interest, taxes, depreciation and amortization more than doubled to $149 million. 

However, the company is still withholding guidance for the coming year, saying that the outlook is simply too unclear. 

“Given the evolving conditions created by and in response to the Covid-19 pandemic, measures that have been lifted may be reintroduced if there are adverse developments with respect to Covid-19, and management continues to be unable to reasonably estimate the impact of such developments to the company’s future results of operations, cash flows, or financial condition,” the company said in its earnings release.

Wynn’s stock has risen some 12% since the start of the year despite the latest wave of Covid-19 providing a temporary setback to visits. That’s mainly because Chinese regulators have indicated they are not likely to make major changes to the licensing regime in Macau, which would allow it to continue operating there largely as it does at present. A final decision is due in June.  

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