Sands Center, Venetian Buyers List Draws A Crowd, Including Fertitta, Galaxy Entertainment

Posted on: November 11, 2020, 06:39h. 

Last updated on: November 12, 2020, 10:30h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

It’s been less than a month since Las Vegas Sands (NYSE:LVS) said it’s in early discussions to potentially unload its Nevada assets for as much as $6 billion, and speculation is intensifying regarding potential buyers.

Sands
Sands Convention Center and the Palazzo in Las Vegas. An analyst has interesting thoughts on potential buyers for the venues. (Image: Fox Business)

Macquarie gaming and leisure analyst Chad Beynon has some ideas regarding possible suitors for Sands Convention Center, Venetian and Palazzo, and his list is interesting, to say the least. It includes Golden Nugget owner Tilman Fertitta and Churchill Downs (NASDAQ: CHDN), among others.

The buyers that were looking at Caesars, they’re probably the same ones that would at least look at this,” the analyst told the Las Vegas Sun. “Tilman Fertitta was interested in Caesars, so I certainly think he’d be interested. On paper, it seems like that could work.”

Indeed, Fertitta, who owns five Golden Nugget casinos and the NBA’s Houston Rockets, among other enterprises, has long coveted a Strip asset. His Las Vegas holding is located downtown.

Beynon’s list also includes James Packer’s Crown Resorts and Galaxy Entertainment, a direct LVS rival in Macau.

Interest Doesn’t Always Translate to Buyers

Should Sands proceed with selling its Las Vegas assets, and it appears the operator will, generating interest for those venues isn’t going to be the issue. Locating credible buyers that can absorb the $6 billion price tag is a different ballgame.

Analysts are already saying the pool of legitimate buyers that can swiftly cut $6 billion checks is shallow. Fertitta may able to swing such a deal, but it would likely require a syndicate of lenders agreeing to financing, some or all of which could carry high interest rates. As for Churchill Downs, that company’s market capitalization is just $7.25 billion, so $6 billion for just three venues could be a stretch. It’d likely need to sell equity and raise capital elsewhere to make a run at the LVS assets.

As for Crown Resorts, that operator is facing a raft of regulatory trouble in its homeland of Australia stemming from money laundering allegations, meaning large-scale mergers and acquisitions for that company could be off the table over the near-term.

Crown once had plans for an integrated resort in Las Vegas, but eventually scuttled the project and sold the land to Wynn Resorts, according to the Sun.

Other Avenues

Galaxy and LVS would make for strange bedfellows, because the duo control nearly half the market in Macau, the world’s largest casino center. Additionally, there’s been chatter that if Sands parts with its Strip jewels, it could become an Asia-based company, focusing exclusively on that region.

That means if Galaxy were to buy Venetian, Palazzo and the convention center, it could directly fund one of its biggest rivals, enabling LVS to attack the Asian company in that region.

Adding to the rumor mill, some analysts say it’s possible Sands could offload the Strip properties to a real estate investment trust (REIT) and lease back the venues, allowing it to raise cash while maintaining a Nevada presence.

In recent days, there’s been social media chatter to this effect, but one of three gaming REITs — Gaming & Leisure Properties — already declared it’s not interested in adding Las Vegas exposure to its portfolio.