Melco Eyes Condos With Trump Name

The exclusive name at Macau's City of Dreams resort will allow the casino operator to pump up pricing.
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If all goes according to plan, the condos at

Melco PBL's

(MPEL)

City of Dreams Macau casino development will carry the

Trump International

brand name, enabling Melco to ask premium pricing for the units.

Sources familiar with the Macau market say that Trump International has been looking to team up with Melco for a development in the region. The possible partnership appeared to get more credence on Tuesday, when a sales call between

Citigroup's

(C) - Get Report

Hong Kong office and institutional investors mentioned the likelihood of a deal between the two parties, according a buy-side source on the call.

Citigroup, Melco and Trump International, Donald Trump's private real-estate development arm, could not be reached for comment.

City of Dreams, an underwater-themed casino, will be Melco's second casino in Macau. It is set to open in early 2009. The company's first Macau casino, Crown Macau, opened in May.

Macau, a former Portuguese colony, is the only region of China where gambling is legal. Last year, the island surpassed Las Vegas as the world's largest gambling market.

The condo-hotel units at City of Dreams will eventually total 1.3 million square feet. The 650 units are set for completion by the end of 2009, and the company plans to presell some units ahead of completion.

City of Dreams will sit right next door to the Venetian Macau, set to be the world's largest casino when

Las Vegas Sands

(LVS) - Get Report

opens the property this summer on the Cotai Strip section of the island.

Melco so far has not mentioned possible pricing on its condo units at City of Dreams.

Las Vegas Sands is asking for $1,400 to $1,450 per square foot for its Four Seasons condo units to be built at Venetian Macau. The company hasn't decided on the number of units it will sell, but total square footage will be 800,000, and sales will start in the third quarter, says Las Vegas Sands spokesman Scott Henry.

Shun Tak Holdings, a Hong Kong-based property firm, recently sold many of the residences at its One Central Residence project in Macau for HK$4,500 per square foot. (Based on Thursday's exchange rates, that's equal to about $576 U.S. dollars per foot.)

The project opens in 2009, but buyers can flip the units to others. According to Macau press reports, the properties are now trading on the secondary market for HK$6,000 per square foot. That translates into about US$770 per square foot.

Using $770 per square foot as the pricing for Melco's condo units, the City of Dreams residential piece is worth $1 billion.

But the Trump name could allow for the premium pricing at Four Seasons level -- meaning the residential portion of Melco's project could be worth more than $1.8 billion. On a per-share basis, the higher price adds about $2 to Melco's valuation, according to estimates by

TheStreet.com

.