One of the largest projects is the US$2.1 billion City of Dreams being built by Leighton Asia, China State and John Holland, on behalf of the Melco PBL development company - owned by Lawrence Ho’s Melco gambling company and James Packer’s Crown group.

After a slow start, work on the project got a serious kick along after Mr Packer and Mr Ho signed up Wal King’s Leighton Holdings to take on the construction.

But that is just one of many projects on the small island, a 50-minute ferry trip from Hong Kong. Housing prices on Macau are going through the roof, spurred by the huge inflow of cash from gambling revenue and hotel room sales.

Roger Barnett, the project director for City of Dreams, said Macau used to be a sleepy town which people visited on the weekend or if they wanted a night out at a casino.

“But now that has completely changed. It is like Las Vegas on steroids. It is absolutely booming,” Mr Barnett said.

The latest report on Macau from Colliers International shows the openings of the Venetian Macau, MGM Grand Macau, Grand Lisboa and Crown Macau last year strengthened the island’s position as a world-class tourist destination.

There were 27 million visitors by the end of last year, which was a year-on-year growth rate of 22.8 per cent. The rising number of visitors as well as increased spending by residents drove retail sales up 33.2 per cent last year and there was a 9.4 per cent year-on-year growth for private consumption expenditure in last year’s third quarter.

There were 28 casinos in Macau by the end of last year.

The report said sustained low interest rates of about 3 per cent and accelerating inflation, together with strong economic fundamentals, would help trigger stronger demand for residential properties.

“In addition, the proposed plan of the first home buyers loan scheme will add extra impetus to the sales market,” the report said.

And on the all-important hotel sector, the report showed that average hotel occupancy rate was 83 per cent, despite the number of hotel rooms expanding by 24.4 per cent year-on-year to more than 16,000 to the end of December.

“The continuous arrival of new resorts and ongoing development of meetings, incentive tours, conventions and exhibitions industries remain the key factors for a positive outlook.”

Hotel projects in the pipeline include the first stage of Ponte 16, which started operations last month, with 420 rooms in the 20-storey hotel and a 25,000 square metre casino.

There are also four hotel-casino developments scheduled to open this year: the Four Seasons, Sheraton Macau, Shangri-La and the Traders.

“Macau enjoyed almost 30 per cent growth in 2007 as a gaming and entertainment hub,” the Colliers report said. “Gaming revenue increased by 45.7 per cent year on year to more than 24.9 million pataca [$3.43 million] in the fourth quarter 2007, fetching a total of 83.8 billion pataca in 2007.”

Thanks to all that cash rolling in, the average residential price edged up over 20 per cent, with almost 20,000 transactions. Colliers said the residential projects coming on line included Harbour Mile by Sun Tak Property comprising seven towers - five for residential, one for office and retail and one for serviced apartments - due for completion by 2010.

• Colliers International Bullish About Macau Property Market
• Macau’s high-end residential triving
• Real estate news on Macau
• Macau Property Prices Boost May Undermine Casino Revenues
• Macau high-end residential market thriving

City of Dreams will be a must-see integrated urban entertainment resort that will combine electrifying entertainment, stylish nightclubs, an amazing array of accommodation options, top-notch dining, world-class shopping as well as a spacious and contemporary casino.

“Our dreams are taking shape. In approximately one year, City of Dreams will begin to welcome visitors from all over the world,” said Lawrence Ho, Co-Chairman and CEO of MPEL at the topping out ceremony. “Macau is transforming from a gaming-focused destination into a leisure hot spot. City of Dreams will continue to drive this phenomenon and usher in a new era of gaming and entertainment in Macau.”

In addition to approximately 2,200 guest rooms and a wide range of restaurants and bars, City of Dreams will offer a kaleidoscope of entertainment options including stylish nightclubs, live music venues, free attractions and the spectacular Dragone show. The resort will also incorporate a 420,000-square-foot casino with over 550 gaming tables and 1,500 gaming machines.

One of the iconic landmarks of City of Dreams will be a free attraction that will provide visitors with a totally immersive experience, unlike anything they have seen in Asia or elsewhere in the world. Housed in a unique dome-shaped theatre, the production will combine high-definition video content, a customized music score, thousands of theatrical lights and a variety of sensory effects to create a spectacular 10-minute visual extravaganza that is sure to become a must-see for every visitor to Macau.

Renowned for spectacular and imaginative productions, Dragone will stage a permanent show at City of Dreams. Founder Franco Dragone will personally direct the breathtaking water-themed show, created specifically for City of Dreams, which is due to open in Macau in the second half of 2009.

A variety of musical performances by well-known regional acts, emerging artists and cover bands will be staged at a live concert venue that can accommodate up to 1,500 people.

The different styles of accommodation at City of Dreams will meet the diverse tastes of the wide spectrum of visitors the resort will attract from Asia and around the world. The options will include Crown Towers Cotai, Hard Rock Hotel, the Grand Hyatt’s twin towers and the apartment hotel, which will together provide over 2,200 guest rooms and suites. Each hotel will also offer its own individual spa and leisure facilities.

“We introduced the Crown brand into Macau in 2007 with the opening of Crown Macau, which has quickly become the property of choice for high-rolling VIP customers in Macau,” said Mr. James Packer, Executive Chairman of Crown Limited, and Co-Chairman and Director of MPEL. “We are very excited about extending the Crown brand in Macau, which is synonymous with a luxury six-star experience, through the opening of the Crown Towers Cotai at City of Dreams. City of Dreams is testament to our optimism about the future rapid development of the Macau market.”

City of Dreams will also feature a broad range of restaurants, noodle bars, cafes and lounges. These food and beverage venues will be located throughout the resort offering fine dining experiences as well as casual meals.

The resort will be home to some of the world’s most sought-after and acclaimed brands, with approximately 175,000 square feet of boutiques featuring high-end fashion labels as well as premium jewellery and watch brands.

Phase one of the City of Dreams resort will feature the casino, restaurants, retail boutiques, nightclubs, the iconic audio visual attraction, Crown Towers and Hard Rock Hotel. Phase one will be completed during the first half of 2009 with the date of the grand opening to be set early next year. The operation of the entire City of Dreams will require the support of 12,000 employees, which the company intends to recruit through a series of career fairs in Macau and throughout Asia starting in the summer of 2008.

With permission :: Melco PBL

• Hard Rock Hotel and Casino Coming To Macau
• Hard Rock Hotel and Casino Macau Signs With Melco PBL
• DRAGONE “City of Dreams” Show Looking For Personnel
• May 12 | Official Opening Crown Macau
• Crown Macau Officially Opened by James Packer

The Hong Kong-listed company said its net profit in the 12 months ended Dec. 31 was HK$2.69 billion (US$346 million; ?219 million), down from HK$2.84 billion in 2006.

Melco ? controlled by Lawrence Ho, son of Macau gaming magnate Stanley Ho said revenue rose 27 percent to HK$1.02 billion (US$131 million; ?83 million) from HK$801 million.

The company’s board proposed a final dividend of HK$0.01 (US$0.001; ?0.0008) per share, unchanged from a year earlier.

Melco booked a gain of HK$3.1 billion (US$398 million; ?252 million) from the listing of unit Melco PBL Entertainment Macau Ltd. (MPEL) in the U.S. in December 2006.

Melco PBL is one of six licensed casino operators in Macau, the only place in China where casino gambling is allowed.

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• Macau’s Biggest Slot Machine Supplier Profit Up By 20%

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City of Dreams Complex

According to the Daily Telegraph, Crown Macau owned by Melco PBL Entertainment, James Packer’s first casino foray in the city had a rocky start after its opening in May last year.

But its fortunes have been given a major boost as a result of a strategic deal late last year with a Hong Kong-listed junkets operator, A-Max, and the decision to refocus the casino entirely on the VIP market.

The aggressive deal with A-Max, which involves higher than industry average total commissions of up to 1.35 per cent, has helped bring VIP gamblers to the upmarket casino, taking market share off more experienced operators, such as Macau veteran Stanley Ho and new players Galaxy and the Macau Sands.

“Thanks to A-Max’s junkets, Melco PBL’s market share improved substantially from 5.7 per cent in November to 18.1 per cent in February, making Crown Macau the busiest casino in the world in terms of betting volume,” Credit Suisse’s Hong Kong-based gambling analyst, Gabriel Chan, says in a bullish new report on the company.

“If we focus on market share in the high-roller segment alone, the improvement was even more astonishing with market share increasing from 6.6 per cent in November to 24.8 per cent in February.”

“A-Max junkets generated about $US5.3 billion ($5.8 billion) in rolling chip turnover in February, up about 5 per cent month on month,” he said.

“In our view, there is room for further growth.

“We expect A-Max’s junkets to generate on average $US6.3 billion rolling chip turnover per month in 2008.” Packer’s Crown now has a 37.9 per cent stake in the company, which listed on the US Nasdaq market in late 2006, alongside the Hong Kong-based Melco, operated by Stanley Ho’s son Lawrence Ho.

Macau observers say the aggressive deal struck with A-Max has seen the junket operator bring in substantial new volumes of high-rollers to Crown Macau, which has been difficult for its rivals to match.

“There has been a dramatic shift in the market since December,” one Macau veteran said last week.

“Stanley Ho’s junket operators have been struggling. Galaxy has been losing market share as well.

“It has not been easy for them to find the consolidators who can bring in the same horsepower as A-Max.”

Under the deal, A-Max, a consolidator of junket operators, receives a total commission rate of between 1.2 per cent and 1.35 per cent from Crown.

A-Max in turn pays its junket operators up to 1.2 per cent.

In the past, Macau casino operators would only pay around 1.1 or 1.2 per cent in total to junket operators to bring in high-rolling gamblers to their premises.

Observers say the financial viability of the Crown Macau deal with A-Max, which involves a potentially higher total commission structure, is dependent on A-Max being able to deliver high volumes, which has so far been the case.

Macau gaming turnover continues to increase, with total monthly revenues twice the level of the Las Vegas strip in recent months.

Unlike last year, which saw a flood of new casino openings in Macau, 2008 is not expected to see any substantial new supply come on to the market, giving the existing operators a chance to consolidate their positions.

The past few months have also seen Crown enjoy an increase in its “hold rate”, or house percentage retained, which has also helped the success of its operations. “Crown’s hold rate was terrible,” said one observer.

“It used to be around 2.2 per cent on baccarat, but now it is 2.7 per cent.”

Crown’s success has put pressure on its rivals to increase the commissions paid to junket operators. As Chan notes in his report, the junket operators now have more bargaining power in Macau than the casino operators.

Chan says that Galaxy’s market share has dropped from 14.9 per cent in November to only 10.3 per cent in February.

“Galaxy has extended credits to select junket operators and raised its commission rate to 1.25 per cent, even higher than the 1.2 per cent A-Max is paying junket operators,” he notes.

The new competition from Crown has also prompted Sheldon Adelson’s massive Venetian, which opened in mid-2007, to revise its commission structure, a move which has helped to boost its market share by 2 percentage points to 12 per cent in February. The Venetian’s commission rate is now 1.26 per cent.

Chan predicts that Melco PBL’s earnings before interest, tax and depreciation could reach as high as $US280 million in 2008. “With a total construction cost of about $US570 million, we estimate Crown’s payback period to be only about two years,” he says.

• Crown Macau: the new VIP king
• Amax Stays Committed to Crown Macau Deal
• Crown Macau Winning With VIP Junkets Deals
• Melco PBL Fails to Raise Much Needed Cash
• Melco PBL Just Short of Raising US$219 million

Starting at just past 9pm, Dion gave fans a taste of her new album as well as wooing the audience with many of the old favorites. During the one and a half hour show, Dion changed wardrobe over five times. She performed more than 20 songs, saving the fans’ favorite until the end.

The title track to the movie “Titanic”, “My Heart Will Go On” brought the crowd to their feet during the one song encore.

During the show Dion chatted with the audience. She had spent the last three days in Macau, during which time she checked out some of the local tourist attractions, she told the audience.
Dion even learned some Mandarin for the occasion, thanking the crowd with the phrase “Xiexie”.

The tour, promoting the singers latest album, kicked off in Johannesburg, South Africa last month where she played to over 300,000 fans. The grueling schedule will see the Canadian perform more than 100 shows over the next year.

In a sign of the new status of Macau in the region, Dion skipped Hong Kong, traveling to Macau from Osaka, Japan.

Dion is also a favorite in the US gaming capital, Las Vegas. Beginning in 2003, the star sang five nights a week at The Colosseum at Caesars Palace in Las Vegas in a 4,000-seat arena designed specifically for her show.

“A 90-minute event, “A New Day” introduced a new form of theatrical entertainment, a fusion of song, performance art, innovative stage craft and state-of-the-art technology,” a press release states.

“Over the course of the shows record-breaking sold-out run, more than 3,000,000 people have seen Celine Dion’s “A New Day.”

The show took in approximately USD400 million according to promoters, making it “one of the highest concert grosses in music history”.

“A New Day” was created by Dragone Productions, who will also create a performance for the Cotai City of Dreams‘ development beginning next year.

From Macau, Dion will fly to Seoul, South Korea for two shows.

With Permission :: Macau Daily Times

• Celine Dion Hits Macau on “Taking Chances World” Tour
• The Police Rocks Sell-out Crowd in Macau
• Air Supply to Perform Again at Sands Macau Theatre
• DRAGONE “City of Dreams” Show Looking For Personnel
• Celine hits the Cotai Strip

The fall has been attributed to various factors including uncertainty surrounding predicted earnings due to a flurry of casino and hotel openings squeezing revenues, a $US400 million ($452 million) shortfall in development funds, and fears of Chinese authorities changing gambling policies arbitrarily, according to the Sydney Morning Herald yesterday. Melco PBL has also delayed the final purchase of the land for the third project on the Macau Peninsula, Trinity, and says it is unlikely to secure the land until the middle of this year.

Trading in Melco PBL has been volatile since it listed on the US Nasdaq market just over a year ago at $US19 a share. It rose to as high as high $US23.55 on December 19, 2006.The company has been dogged by cost overruns on two of its Macau projects, volatile VIP visitor numbers, a threatened crackdown on visitor visas by Chinese authorities and concern about oversupply of casinos in the enclave. Falls in Melco PBL’s share price in November and early December were blamed on concerns its junket agency, AMA, would not get funding.PBL, which has since demerged its gambling interests into Crown Ltd, contributed about $US400 million for an initial 43 per cent stake in the company in December 2006.

It also transferred to it a $US900 million casino licence. After a series of capital raisings, Crown now has a 38 per cent stake. PBL and Melco’s six-star casino and resort, Crown Macau, fully opened last August after a gala opening in May. The first stage of the $US2.3 billion City of Dreams project is to open late in March 2009. Putting the heat on Melco PBL have been recent openings of big, brash casinos such as last month’s $1.5 billion MGM Grand Macau. But Mr Packer’s recent move to invest in Pennsylvania is looking up, with an international gambling consultancy report released yesterday saying that poker machines in that state were yielding higher profits for casinos than in any other state on the US east coast.

ASX-listed Crown, in which Mr Packer is a major shareholder, last month agreed to buy Pennsylvania racetrack-casino The Meadows, which has more than 1700 poker machines and is set to expand to 3000. Each of these machines grossed $US347 a day between September and November last year.

• Crown Macau: the new VIP king
• Melco PBL 2006 Losses Widenend
• Melco PBL Just Short of Raising US$219 million
• Melco PBL Losses Narrows Thanks to Crown Macau
• All Not Rosy at Crown Macau

Quarterly Highlights
* US$43.1 million in new acquisitions announced

* 101% of Company’s equity now committed

* Continued price appreciation in Macau residential property

* Positive Macau Government Policy Address

* Opening of prestigious MGM Grand Macau

Fund Overview
In October, the Company announced the successful acquisition of its fourth major property (Property 4) bringing to a close almost two years of negotiations and successfully converting a key pipeline site which was referred to in its admission document. The total expected investment value amounts to US$26.6 million, comprising an acquisition price of US$15.85 million and an estimated redevelopment cost of US$10.75 million.

The 10,500 sq ft freehold site is located adjacent to Senado Square, one of the most popular tourist destinations on Macau Peninsula, which forms part ofMacau’s World Heritage district due to its rich architecture. The area’s increasing local and tourist pedestrian traffic has resulted in strong demandfor retail outlets in the vicinity, driving retail property prices and rents toamongst the highest in Macau. To capitalise on the location of Property 4, the Company is planning a mixed-use redevelopment project incorporating prime retail and entertainment space.

During the quarter, the Company also acquired a number of smaller properties in various strategic locations across Macau in a series of separate purchases for an aggregate consideration of US$16.5 million. This is part of an ongoing strategy of acquiring well-located and attractively priced smaller propertyassets in key areas across the Territory.

Portfolio Summary
Property Sector Type Positioning Current Capital
Status Commitment
1 Residential Redevelopment Local Residents Design Process US15.68m*
2 Residential Development Premium Luxury Construction US$86.58m
3 Residential Redevelopment Entry-level Consolidating US$45.96m*
4 Mixed-use Redevelopment Retail/Tourism Planning US$26.6m*
Others# Various Various Various Various US$16.5m
Total US$191.32m

*Includes acquisition & projected redevelopment costs

#Various smaller individual properties purchased by the Company

Development of “One Central”, the premium mixed-use development in which the Company has purchased a residential tower (Property 2) remains on schedule for completion in 2009, with construction now reaching the 15th floor out of the planned circ. 40 floors. The attractive location of this project was further cemented by the recent opening of the prestigious 600-room MGM Grand Macau casino-resort which will be connected to One Central’s retail podium. Secondary market demand for One Central units has remained robust since the Venetian Macao opened in August and in the run up to the MGM opening, with transacted prices of more than US$1,000 per sq ft being achieved for well-positioned units.

Property 1’s conceptual design and site investigations are now well underway and the demolition of the existing structure is scheduled to commence in 2008. This is a very well located site in a popular neighbourhood on Macau Peninsula, which the Company intends to develop into residential flats targeted at localresidents.

Property 3, located in the rapidly regenerating northern area of Macau
Peninsula, will be redeveloped into affordable apartments catering to increasingdemand from entry-level local residents. The Company is continuing negotiations to consolidate adjacent sites in this area.

Following these latest acquisitions, the Company has now committed US$191 million or approximately 101% of the total equity raised at AIM Admission and continues to negotiate on a further eight sites totalling approximately US$450million in combined acquisition value.

Market Overview

Economy
Macau’s rapid economic growth continues to be accompanied by a flood of foreign investment. Government statistics indicate that gross fixed capital formation grew by 38.3% YoY, helping to drive GDP growth to 30.9% YoY in Q3 2007. This has placed the local labour market under significant pressure with unemployment hitting a ten-year low of 2.9%, pushing wage inflation to over 20%. Gaming receipts, one of the principal drivers of Macau’s GDP, continue to grow exponentially exceeding US$8.5 billion in the first ten months of 2007, a rise of 47.1% YoY. Visitor numbers also set new records, hitting 24.3 million from January to November 2007, up 22.9% YoY.

Property Market
Residential property prices continued to rise in Q4 as limited supply failed to meet the growing demand for quality properties across Macau. The strong fundamental demand from both investors and end-users has been further boosted by booming regional stock markets and negative real mortgages rates, while the sub-prime mortgages crisis in the US has so far had limited impact on lending or market sentiment.

High-profile marketing and sales campaigns were launched during the quarter for a number of new residential projects. These included the mid-tier 80-unit Ginza Plaza on Macau Peninsula where prices reached over US$600 per sq ft and Windsor Arch, a large-scale project comprising 1,600 units on Taipa, where the asking price for better units will reportedly be set at up to US$960 per sq ft.

In December, the Government announced that two plots of land in North West Macau Peninsula will be auctioned via a public tender process in January 2008. The sites are zoned for residential development which will be positive for the ongoing regeneration of this area where the Company’s Property 3 is situated. The auction is part of the Government’s move towards greater transparency in the land disposal process and is a significant event as only one plot of land has been sold via a public tender since the handover in 1999. The Government also recently announced it will be reducing estate tax and waiving stamp duty for first-time buyers of domestic properties valued at up to US$385,000. This is part of a move to assist lower income earners and is positive for the Fund’s  “entry-level” positioning since it is likely to catalyse increased demand for affordable housing in Macau.

Government’s new initiatives
In his eighth policy address delivered in November, Chief Executive Edmund Ho reiterated the Government’s continued commitment to developing the gaming and tourism industries, whilst maintaining the fight against corruption and crime. He also outlined several new policies  designed to improve the city’s political and socio-economic status. These include the construction of subsidised apartments in the North of Macau Peninsula for low income residents which is in response to rising criticism of the Government’s lack of efforts to assist the poorer segments of the population.

New Casinos / Hotels
In December, Macau witnessed the high-profile launch of MGM Grand Macau, US-listed MGM Mirage’s first project in Asia. The opening signifies that all six gaming concessions in Macau are finally in operation. SJM, owned by local casino mogul Stanley Ho, has announced it will be building a new hotel on the site of its original flagship and Macau’s oldest casino, the Lisboa Hotel. Redevelopment is expected to begin following the full opening of the neighbouring Grand Lisboa Hotel in 2008.

Looking ahead, attention is likely to focus on the emergence of the Cotai Strip as the Territory’s integrated business, leisure and gaming destination, as a stream of upscale casino-resort-hotels increasingly dominate the landscape. The Four Seasons and Shangri-La hotels are due to open in 2008 followed thereafter by Galaxy’s “Mega Resort”, Melco/PBL’s “City of Dreams” and “Macau Studio City” backed by eSun Holdings.

Summary
2007 proved to be an unprecedented year for Macau. With a significant amount of foreign investment capital committed to long term projects, more transparent government and an increasingly favourable business environment, we continue to believe that we are at an early stage in the Territory’s economic re-rating. The Company’s portfolio of niche, strategically placed properties in key market segments, leaves it well-positioned and the immediate focus remains on acquiring further assets which are both attractively valued and clearly differentiated.

The Company’s first half results for the period to end December 2007 will be released in February 2008.

About the Macau Property Opportunities Fund
MPOF, which raised £105 million in a placing and commenced trading on the Alternative Investment Market of the London Stock Exchange on 5 June 2006, is a closed-end investment company incorporated in Guernsey. The Company’s investment policy is to provide shareholders with an attractive total return, which is expected to comprise primarily capital growth, but with the potential for dividends over the medium to long term. MPOF focuses on investing in property opportunities primarily in Macau, but also potentially in the Western Pearl River Delta region and in exceptional circumstances, greater China.

The Investment Manager of MPOF is Sniper Capital Limited and the Investment Adviser is Sniper Capital Management Limited.

About Sniper Capital Limited
Sniper Capital is an independent investment manager specialising in property investment in niche, undervalued and developing markets. The Company’s investment strategy is to identify, acquire and develop properties clearly differentiated by location, value and sustainability of demand. Sniper Capital currently manages two funds with combined assets of US$250 million.

For further information:
Website: www.mpofund.com

• Successful completion of £105 million fundraising
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• Jones Lang LaSalle Expects Strong Macau Property Growth
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• Macau’s newly-rich dip their toes into overseas property market

Earlier this month Melco PBL announced a USD142 million loss for the nine months ending September 30. The third quarter saw the company lose USD45.2 million, five times the loss sustained in the same period last year.

While the poor result was blamed on license and opening costs, the company is confident a high-roller strategy will move it into the black.

Crown Macau is in the process of reverting to an almost totally VIP-focused casino, with some 187 tables to be dedicated to VIP gamers and a maximum of 60 for the mass market.

It is not so much a new idea but a reversion back to the original plan, according to Mr Ho.

“That was the original vision three years back and when it opened we kind of went away from that,” he said.

“I think in hindsight, the original vision that I had was completely right and that’s why we’re going back to the original track.”

Market revenue from VIP Baccarat tables continued to climb last quarter to US$17o million or a 67 percent share of the games of fortune revenue.

The next earner for casinos is mass market baccarat that pulled in just over US$500 million for the nine months until September 30.

Contracts with some 20 junket operators, who will bring VIP gamers to the casino and finance their high stake betting, is the basis of Crown Macau’s strategy.

At a cheque presentation ceremony yesterday for a US$175,000 donation to the International School of Macao, Mr Ho said plans for the City of Dreams Cotai project were also now on track.

“We have received the contract from the government (for the land) and have agreed to it and now we are waiting for the gazettal,” he said.

Although not receiving the land that was originally asked for, Mr Ho hopes the company’s investment in Macau will help with future negotiations.

“Melco PBL Entertainment, you could make an argument, other than SJM who have been here for 40 years, have invested probably the most in Macau,” he said.

“If you look at what we had to invest in the gaming license, we bought it for 900 million, we’re putting close to 3 billion dollars into City of Dreams, we put about 550 million into Crown Macau so we hope that we have more opportunities and the government gives us opportunities.”

Melco PBL are targeting a March 2009 opening date for phase one of the City of Dreams project, which will include a 420,000 square foot casino and approximately 145,000 square feet of retail space, as well as the 370-room Hard Rock Hotel and Crown Towers Hotel, Cotai, with approximately 300 rooms, suites and villas.

The company will be hoping its relationship with the government will help the development of its first peninsula site, tentatively named Trinity.

The company pushed back a US$192 million land purchase from July this year until mid 2008, and reportedly is targeting a 2010 opening for the US$745 million resort-casino.

Yesterday Mr Ho said plans were not concrete and the company was assessing the effect of the first Cotai project on the peninsula.

“We’re 100 percent committed to building it (Trinity project),” he said.

“We want to see how the market plays out. Obviously the Venetian is a big draw away from the Peninsula so we just want to study that.”

Courtesy: Macau Daily Times

• Crown Macau Officially Opened by James Packer
• Crown Macau Getting Ready For May 9 Opening
• City of Dreams Suffers a US$600 Million Cost Overrun
• Leighton to Build City of Dreams
• Melco PBL Secrets About Macau Play Are Out

Hold adjusted property EBITDA has grown each month during the third quarter, and we are excited by our continued progress in expanding the business. VIP rolling chip volume has shown excellent growth, progressing from US$1.375 billion in July to over US$2.5 billion for the month of October. Based on our estimation for the month of October, Crown Macau’s combined VIP and mass table game market share of the whole market was approximately 8%, continuing the positive growth trend and despite the introduction of a major new entrant into the market.

“We are very optimistic that we can continue to drive additional improvement at Crown Macau, as a result of our previously announced reconfiguration of the property to accommodate additional VIP capacity with a commensurate reduction in mass market and slot capacity. This reconfiguration reflects the positive reception Crown Macau has received from the market and complements our competitive advantage in the VIP segment driven by our market leading amenities and strong local relationships with junket operators.

“We believe that this reconfiguration will lead to significantly increased gaming activity at Crown Macau and an expansion of our already strong junket network. Our previously announced Gaming Promotion agreement with Ama International Limited has the potential to meaningfully accelerate this process, largely due to the working capital solution this agreement brings to the property. The physical reconfiguration of the property is scheduled for completion by December 1, and, pending satisfaction of certain conditions, we anticipate that full Ama operations will commence at Crown Macau by year end. Final table mix plans for the reconfiguration of Crown Macau is still being finalised. Following completion of the reconfiguration and based on our current plan, Crown Macau is expected to have approximately 187 VIP gaming tables, 57 mass market gaming tables, and 230 gaming machines.”

Company-wide Operating Results

Total revenue, net of rebates paid on rolling chip play, for the third quarter of 2007 was US$113.4 million, up from US$7.3 million in the third quarter of 2006. Results for the third quarter of 2007 include the operations of Crown Macau, which opened on May 12. The year over year revenue increase was driven primarily by the opening of Crown Macau.

Third quarter results also reflect the impact of the acquisition of the gaming sub-concession in September 2006, which resulted in a change in reporting of gaming revenues from the Company’s Mocha Clubs from a service fee basis prior to acquisition of the sub-concession, to gaming revenue based on net win after gaming taxes since the acquisition of the sub-concession.

Total group operating costs and expenses were US$159.7 million in the third quarter of 2007, up from US$16.9 million for the third quarter of 2006. The increase was largely attributable to the opening of Crown Macau and the commencement of amortization of the Company’s gaming sub-concession, increased amortization of land use rights for projects under development, and increased pre-opening, selling and marketing investment costs associated with the development of Crown Macau and City of Dreams. Pre-opening expense for the third quarter of 2007 was US$3.3 million, mainly associated with the final phase of opening of Crown Macau during July 2007.

Total non-operating income for the third quarter of 2007 was US$0.8 million, including US$1.9 million in interest income and US$1.0 million in net foreign exchange losses. Capitalized interest during the third quarter of 2007 was US$2.0 million.

The Company reported a net loss of US$45.2 million for the third quarter of 2007, compared to a net loss of US$7.7 million for the third quarter of 2006. Net loss per share for the third quarter of 2007 was US$0.037, compared to a net loss per share of US$0.015 in the third quarter of 2006.

Crown Macau 3Q Operating Performance

In the third quarter of 2007, net revenue at Crown Macau totaled US$97.6 million. Prior period comparisons are not available.

Adjusted EBITDA(1) at Crown Macau for the third quarter of 2007 was a deficit of US$10.4 million.

Our expected rolling chip table games hold percentage is 2.7%. In the VIP table games segment, rolling chip volume totaled US$4.8 billion for the third quarter of 2007. Actual rolling chip table games hold percentage (calculated before discounts and commissions) was significantly below expectation at 2.3%. Life-to-date of the property through November 13, rolling chip table games hold percentage is slightly below 2.5%.

In the mass market table games segment, drop (non rolling chip) totaled US$99.3 million and table-hold percentage was 17.4%. The expected range for mass market table games hold percentage is 16% - 18%.

Gaming machine handle (volume) was US$67.1 million and gaming machine revenue was US$4.2 million in the third quarter of 2007.

Total non-gaming revenue at Crown Macau in the third quarter was US$8.1 million. Occupancy in the third quarter of 2007 was 51.9% and the average daily rate (ADR) was US$233 per occupied room.

Mocha Clubs 3Q Operating Performance

Gaming revenue from the Company’s Mocha Clubs totaled US$19.8 million in the third quarter of 2007. Revenue for the third quarter of 2006, before the Company had acquired its gaming sub-concession, totaled US$5.7 million in the form of service fees received under the terms of a revenue-sharing service agreement with SJM, where the revenue share was calculated as 50% of net gaming revenues after deduction of Macau gaming tax at 39% of gross gaming revenue. On a pro forma basis (which assumes that the Mocha Clubs had operated under an owned gaming sub-concession during the third quarter of 2006), gaming revenue from the Mocha Clubs was essentially flat year-over-year, despite a reduction in the average number of gaming machines in service in third quarter 2007 as compared with third quarter 2006.

Mocha generated US$5.9 million of adjusted EBITDA(1) in the third quarter of 2007, which compares with US$1.1 million in the third quarter of 2006.

The Company’s seventh Mocha Club opened on October 3, 2007 at Mocha Square, a prime location in central Macau. It added approximately 130 gaming machines to our total existing installed base of gaming machines at Mocha Clubs. Additionally, the first phase of a two phase expansion of an existing facility at Hotel Royal opened in November and phase two is expected to open in January 2008. Taking into consideration both of these developments, Mocha Clubs is expected to have over 1,250 gaming machines by the end of January 2008.

In the third quarter of 2007, the number of gaming machines in operation at the Mocha Clubs averaged approximately 980 in six locations versus 1,015 in the third quarter of 2006. Average net win per gaming machine per day increased by 4.3% to US$220 from US$211 as compared with the same period last year. Over the same period, the total number of gaming machines in the Macau market as a whole more than doubled on a year-over-year basis.

Nine Month Results

For the nine month period ending September 30, 2007, the Company reported revenue of US$178.8 million versus US$18.2 million in the nine month period ending September 30, 2006. The year over year revenue increase was driven primarily by the opening of Crown Macau.

The Company reported a net loss of US$141.6 million for the nine month period ending September 30, 2007, compared with a net loss of US$20.5 million for the nine months ending September 30, 2006. The net loss per share for the first nine months of 2007 was US$0.117, compared to a net loss per share of US$0.041 for the year ago period.

City of Dreams Update

City of Dreams is on budget and remains targeted for opening by the end of March 2009. The initial phase opening will include substantially all of the 420,000 square foot casino and approximately 145,000 square feet of retail space, as well as the 370-room Hard Rock Hotel and Crown Towers Hotel, Cotai, with approximately 300 rooms, suites and villas.

The 1,000-room Grand Hyatt Macau hotel is scheduled to open in September 2009, and the 2,000-seat Theatre of Dreams is scheduled for completion in the first quarter of 2009. Opening night is expected before year-end 2009 following four to six months of rehearsals. The approximately 800 unit apartment hotel complex integrated within the City of Dreams footprint is expected to be completed by December 2009 and to be marketed in advance of project completion, subject to compliance with legal and regulatory provisions.

The main podium superstructure works are now over 84% complete and roughly 40% of the hard costs associated with the project have been let to contractors. The Hard Rock hotel tower and Crown Towers hotel tower construction works have both progressed to the 9th floor.

Macau Peninsula Project Update

The Company continues to review and develop its plans for development of the Macau Peninsula project. Those plans are subject to completing the acquisition of the site and certain conditions including meeting applicable Macau regulatory requirements.

Financial Position and Capital Expenditure

Cash and cash equivalents as of September 30, 2007, including restricted cash, totaled US$599.1 million. Total outstanding debt at the end of the third quarter was US$614.3 million, consisting of US$500 million from the draw down of the first tranche of our US$1.75 billion bank facility and US$114.3 million in loans from the Company’s two major shareholders. Total debt to shareholders’ equity ratio as of September 30, 2007 was 32%.

The Company priced its follow-on public offering at US$15.50 per ADS following market close on Wednesday, October 31. The offering comprised a public offering of 37,500,000 ADSs representing 112,500,000 ordinary shares with each ADS representing three ordinary shares of Melco PBL Entertainment. The Company raised roughly US$580 million in proceeds from this financing before fees.

Capital expenditure for the third quarter 2007 was US$163.6 million, bringing capital expenditure to US$560.2 million for the nine months ending September 30, 2007. Third quarter capital expenditure consisted of US$2.0 million for Crown Macau and US$157.5 million for City of Dreams. Total capital expenditure for City of Dreams in the first nine months of 2007 amounted to US$339.6 million.

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