US-based casino company Las Vegas Sands (LVS) announced that it has agreed to sell its properties in Las Vegas for a price tag of about $6.25bn. It will now focus on reinvesting in the Asian market, as well as looking for potentially large growth opportunities across new markets. The company will also be changing its name to just “Sands.”
Sands Expo and Convention Center and the nearby Venetian Resort Las Vegas
The Las Vegas properties involved in are the Sands Expo and Convention Center and the nearby Venetian Resort Las Vegas. As part of the deal, announced Wednesday, the real estate investment trust (REIT) VICI Properties will purchase the real estate and associated assets of the properties for $4bn cash.
An affiliate of funds under the management of private equity firm Apollo Global Management is acquiring the operations of the LVS Las Vegas business for a total of $2.25bn. This group will use $1.2bn of seller financing and $1.05bn in cash to complete this purchase. The sale is expected to close by the fourth quarter of 2021.
Change in focus
LVS executives said that the sale of the Venetian is a bittersweet moment, as it was a driving force in the success of the company and its recently deceased founder Sheldon Adelson.
LVS CEO and chairman Robert Goldstein welcomed the beginning of a new chapter in the company’s history with this sale. He said: “this company is focused on growth, and we see meaningful opportunities on a variety of fronts.”
Goldstein underscored that the company’s Singapore and Macau developments are the main focus for now.
While Adelson battled against online gambling expansion for many years, LVS now appears to be open to exploring this space. In the announcement for this deal, LVS COO and president Patrick Dumont spoke about the consideration of new possibilities as the gaming industry evolves, “particularly as it relates to the digital marketplace.”
Looking at pastures new
Over the years, conventions and business travel fueled the LVS operations in Sin City. The ongoing COVID-19 pandemic has meant, however, that no conventions have taken place in the past year.
potential to be “one of the greatest business and leisure tourism destinations in the world.”
Founder Sheldon Adelson previously mentioned that his belief was that the best growth opportunities for the company are in Asia. He thought that Macau has the potential to be “one of the greatest business and leisure tourism destinations in the world.” The casino mogul passed away in January at the age of 87.
The company’s headquarters will remain in Las Vegas and it will still pursue other potential opportunities in the US. Las Vegas Sands is one of the main players jockeying for a license to develop a casino in New York City. While still seemingly a long way off, Texas would also be a lucrative market for LVS if casino legalization became a reality in the state.
A pair of experienced buyers
Apollo Global Management has been eyeing potential opportunities in the gambling sector recently. It bought Great Canadian Gaming for $1.96bn and Italian gaming operator Gamenet for about $1.2bn, both last December.
Apollo also made a bid for William Hill last year, but lost out to Caesars Entertainment. The private equity firm is confident that Las Vegas will experience a strong recovery from the pandemic thanks to the rollout of vaccines and the increase in air travel in the future.
VICI Properties will enter into a triple-net lease deal for the Venetian with Apollo when it takes over the property. The rent will initially be $250m annually for the 30-year agreement. The contract contains a couple of ten-year renewal options. The REIT already owns the real estate assets of many notable gaming venues across the United States, including Caesars Palace, Harrah’s Las Vegas, and Caesars Atlantic City.