Ladies and gentlemen, thank you for participating in the third quarter 2022 earnings conference call of Melco Resorts & Entertainment Limited. At this time, all participants are in a listen only mode. After the call, we will conduct a question-and-answer session. Today's conference is being recorded. I'll now turn the call over to Ms. Jeanny Kim, Senior Vice President, Group Treasurer of Melco Resorts & Entertainment Limited.
Thank you, operator, and thank you everyone for joining us today for our third quarter 2022 earnings call. On the call are Lawrence Ho, Geoff Davis, Evan Winkler, and our property presidents in Macau, Manila, and Cyprus. Before we get started, please note that today's discussion may contain forward-looking statements made under the safe harbor provision of federal securities laws. Our actual results could differ from our anticipated results. In addition, we may discuss non-GAAP measures. A definition and reconciliation of each of these measures to the most comparable GAAP financial measures are included in the earnings release. Finally, please note that our supplementary earnings slides are posted on our investor relations website. With that, I'll now turn the call over to Mr. Lawrence Ho.
Thank you, Jeanny. Our results for the third quarter of 2022 continued to be impacted by the challenging operating environment resulting from low levels of visitation due to COVID-related travel restrictions and the government-mandated closure of our casinos in Macao in July. We are, however, encouraged by the recent reopening of Macao to international tourists and the increase in visitation over October Golden Week. eVisas for individuals and tour groups are now being processed by the Chinese immigration authority, and we are cautiously optimistic that this will lead to a gradual increase in visitations. We submitted our proposal to the public tender for the award of new gaming concessions on September 14, and it has been a smooth and transparent process. We are fully supportive of the Macao government's initiative to further develop Macao as Asia's premium destination for international tourism.
Our integrated resorts offer a wide range of unique non-gaming amenities, and we plan to leverage our experience to provide additional tourist attractions in Macau. Our proposal reinforces our commitment to Macau, and we look forward to playing a leadership role in partnering with the Macau government to execute on its vision. In the Philippines, gaming volumes continue to track towards pre-pandemic levels. We expect to see further growth as travel restrictions around Asia continue to be lifted and travel returns to more normal levels. Gaming volumes in Cyprus exceeded pre-pandemic levels with further easing of COVID-19 related restrictions in the third quarter. In respect to our development projects, the construction of Studio City phase II is progressing on schedule, with construction completion expected within 2022.
We will monitor the market closely to determine the appropriate time to open, and we're currently anticipating the opening to be in stages, beginning in second quarter of 2023. In Cyprus, our current expectation is to complete construction of the City of Dreams Mediterranean and open in the second quarter of 2023. With that, I turn the call over to Geoff to go through some of the numbers.
Thanks, Lawrence. Our group-wide property EBITDA for the third quarter of 2022 was approximately -$35 million. Luck-adjusted group-wide property EBITDA came in at -$38 million. A favorable VIP win rate positively affected EBITDA at COD Macau, Studio City, and Cyprus by around $3.6 million, while an unfavorable win rate negatively impacted COD Manila by around $400,000. Furthermore, the quarter-to-quarter devaluation of the Philippine peso and the euro negatively impacted our reported property EBITDA by around $3 million for COD Manila and about $400,000 for Cyprus. Our OpEx in Macau for 3Q 2022 came in at approximately $1.6 million per day, a decline from $1.7 million per day in 2Q 2022.
Cost containment continues to be a priority, while the quarter-to-quarter decline was partially due to the 12-day casino closures in Macau in July. Turning to our cash and liquidity, as of September 30, 2022, we had approximately $1.6 billion of consolidated cash on hand. Our available liquidity, including cash on hand and undrawn revolving credit facilities, was $2.3 billion at the end of the third quarter. To provide more clarity on our capital structure, Melco, excluding its operations at Studio City, the Philippines, and Cyprus, had cash on hand of around $700 million, available liquidity of around $1.4 billion, and gross debt of $5.3 billion at the end of September 2022. As we normally do, we'll give you some guidance on non-operating line items for the upcoming fourth quarter of 2022.
Total depreciation and amortization expense is expected to be approximately $125 million. Corporate expense is expected to come in at approximately $16 million-$18 million, and consolidated net interest expense is expected to be approximately $105 million-$110 million, which includes finance lease interest of $5 million-$10 million relating to City of Dreams Manila, and around $15 million-$20 million of capitalized interest. That concludes our prepared remarks. Operator, back to you for the Q&A.
Thank you. We will now begin the question-and-answer session. To ask a question, please press star one one on your telephone. Our first question comes from the line of George Choi from Citi. Please ask your question, George.
Thanks for taking my questions. A couple from me, if that's okay. First of all, there are talks about out there saying that the Macau government is asking all seven licensed bidders to up the ante on nongaming investments for the next ten years. I believe all of you would welcome the opportunity to invest, but what puzzles me is where do you get land to build on? Would you please remind us what your current land bank situation is? Should we be surprised if we see all of you know making proposals to invest in Hengqin? That's my first question. My second one is regarding the minimum GGR targets that's announced by the chief executive in late August this year.
Are you worried that the chief executive will raise the minimum GGR target over the next 10 years to the point where you could be asked to surrender some tables and slot machines? That's all I have. I'll jump back to the queue. Thank you.
Hey, George, it's Lawrence. I'll take that. Thanks for the question. Unfortunately, it's a very short answer because at the end of the day, we are in the middle of a public tender, and we, you know, we can't comment, and we've been told that we should not comment. So all I can say is that the Macau government has previously announced that there are no more land. There is no more land bank in Macau for any casino development. That's what they said previously. In terms of our tender and, you know, both of your questions are related to the same issue, which is the tender, so we can't really comment. All I can say is that, as in the prepared remarks, it's been a very smooth and transparent process.
You know, Melco as a company, we've always been the most supportive of the government's diversification and nongaming investments over the years. You know, we are very optimistic for the long-term prospects, and we will continue to execute the government's vision. We welcome all of that. In terms of the detail of the tender, George, sorry, can't give any more details.
Understood. Thank you for your comments. Thank you.
Thank you for your question. Our next question comes from the line of Ricardo Chinchilla from Deutsche Bank. Please ask your question, Ricardo.
Hey, guys. Thanks for taking the question. I was wondering if you could please provide us with an update on the budget for Studio City, how much is left to spend, and, you know, what will be the new kind of maintenance CapEx for that asset?
Geoff, you wanna take that one?
Sure. For Studio City, through the third quarter and beyond the third quarter, the remaining spend is about $135 million. We would expect the maintenance CapEx in the early days to be quite minimal on a new project.
Perfect. If I may ask another one, can you please provide us an update on, you know, OpEx, or your expectation of OpEx? Do you guys anticipate it to be around the $1.7 million per day that you experienced in the second quarter, or do you guys are seeing any cost increases that might drive the figure a little bit higher?
Well, I think as you've noted, the $1.6 million for the third quarter benefited from the casino closure, so looking back to the second quarter makes sense. Beyond that, it really will depend on the pace of any recovery in the market primarily. It's a good starting point. Of course, we'll always endeavor to keep costs as low as possible.
Perfect. Thank you so much for answering my questions.
All right. Thank you. Our next question comes from the line of Joe Greff from JP Morgan. Please ask your question, Joe.
Everybody, can you hear me?
Yes, we can hear you.
Yeah. Yeah, Joe, we can.
Great. Hey, guys. Hope you're well. I know it's extremely early days here, but I was wondering if you've seen any increase in forward bookings or hotel bookings as a result of the eVisas, you know, any anticipation in increased occupancies as a result of visitation tied to eVisas now that the kiosks are live.
Hey, Joe, it's Lawrence. Maybe I'll let David give a little bit more of the details later on. Generally, you know, the announcement at the end of September about the eVisas and the group tours, that's the best news we've heard in the past two in a half, three years. It's, you know, potentially probably the biggest news for the next year. At the same time, China is, you know, a huge country, 1.4 billion people. When they decide things at the national level, to have it trickle down to the provincial and the city levels take time. With the official announcement coming out on October 31st, I think it's gonna take a little bit of time. Of course, recently there have been some COVID outbreaks in various regions in China.
Actually, there are a few cases in Macau as well. It's very early days, but it's definitely very encouraging news for going forward, but. Maybe I hand it over to David.
Sure. I think one of the other things to kind of consider too, as well as the COVID outbreaks a little bit, Joe Graff, is we're just getting ready to go underneath a T8 here about 9:30 P.M. tonight, so we've got a typhoon kind of bearing down on us in the Macau, Hong Kong area. That also obviously has an impact on people's visitation and then what they may wanna do. As Lawrence Ho said, you know, kind of looking towards the long term, we're incredibly optimistic. It's actually really good news. When we talk to our customers, our customers are very enthusiastic. They're anxious to come back and to spend time with us in Macau and to return as much as they can. We are, as I said, just very optimistic.
Our customers are telling us all the right things. We're anxious to get them back. As Lawrence said, the machinery of China, as it trickles on down through the visa process, it takes a little bit of time to get out to all the provinces and all the cities and kind of the second-tier cities and just kind of moving its way through. It'll come. It just takes time. It'll happen. It's just a timing thing.
Great. Thank you.
Thank you for your question. Our next question comes from the line of Billy Ng from Bank of America. Please ask your question, Billy.
Hi, good evening. I just have one question. Regarding the $5 billion per counter deposit that once the bidding process complete, like I think the company are required to transfer the money to Macau. I'm just wonder, is that like after the license issuance, in general, the operators have full control of that $5 billion, so you can use it for daily operations. Do you have access and control of that $5 billion after the license process complete?
Hey, Geoff, you wanna take that one for Billy?
Sure. Thanks, Lawrence. Billy, that's correct. That is our view as well, is that once we get past the process, then that money becomes available for our use.
Okay. Thank you. I don't have any further questions. Thanks.
Thank you. Our next question comes from the line of Dennis Carson from Barclays. Please ask your question, Dennis.
Yeah. Thanks, guys. Hope all is well. My first question is on, maybe from a, like, a higher level, how you guys have thought about the concession process and if there have been any, you know, differences versus your expectations maybe, ten years ago?
Hi, it's Lawrence. No, you know, as I mentioned earlier on, it's been a very smooth and transparent process. Again, I can't go into the details of the discussions with the government. I guess, you know, I would've, you know, expected the same, you know, if it was ten years ago. Overall, we're very pleased with it, and we hope that, you know, to complete that process as soon as possible.
Okay. Thank you, Lawrence. Maybe for my second question, just to follow up on Studio City, I know you guys have always thought of it as sort of a core asset. Do you think that there's any likelihood for Melco to acquire 100% of Studio City at some point down the road?
Well, actually, this question hasn't come up for a while. Look, we love Studio City. We think, you know, when the market reopens, Studio City, given its location, where it's located right next to the Hengqin, and the Macao government right now is building the light rail link to Hengqin right next to Studio City. You know, the thesis has always been there. It's the first stop to Macao in the future. And also, the way that we have repositioned Studio City to be more mass focused, I think also fits very well with the potential change in, you know, demographics going forward.
At the right price, we would love to own all of that asset, but you know, there must be a willing seller and a willing buyer for the right price. Honestly, given what has happened in the last three years, our priority will, in the near term, continue to be on defense in terms of cost containment, and really wait for the market to reopen before we do much. You know, going forward, you know, from a medium long term, for sure. Absolutely.
Okay. Thanks, guys.
Thank you. Our next question comes from the line of Praveen Choudhary from Morgan Stanley. Please ask your question, Praveen.
Thanks. Can you hear me?
We can hear you.
Yes, please.
Oh, great. Thanks, Geoff. Two questions from me, please. The first one is very simple. You had the share buyback of $ 150 million from HKD 200. I'm just asking if those shares have been canceled or not, and I have one more follow-up.
Yeah. A significant majority of those shares have been canceled.
Great. The second question I had was on the return. Before this license expiry started, you know, this last 15 years, some of the casinos were making 40%, 50%, 60% return on invested capital. Towards the far end of it, whether it's SJM's project or MGM project or Parisian, the returns started coming down. My question is with the new license regime, with a different tax structure, different rent structure, different OpEx and CapEx requirements, some of which we don't know, do we expect the return for Studio City phase II to be lower, even lower or you think that we can go back to good old days of returns? How should we think about it? Thank you.
Geoff, do you wanna take that?
Sure. I mean, Praveen, with all the information we have today, we still believe that we can get a very good return for shareholders on phase 2. Obviously, there'll be a level of ramp up for that to hit its run rate. We're very confident that brings, you know, very high quality product to the market and that we'll be able to deliver good returns on that investment.
All right. Excellent. Thank you so much, and good luck.
All right. Thank you all very much for your questions. We have reached the end of the question and answer session. I'd like to turn it back to Ms. Jeanny Kim for closing remarks.
Thank you, operator, and thank you everybody for participating in the call today. We look forward to speaking with you again next quarter. Thank you.
All right. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.