Sands Plans to Spend Some Venetian Sale Cash in Singapore

Posted on: March 12, 2021, 10:27h. 

Last updated on: March 12, 2021, 11:18h.

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

Las Vegas Sands (NYSE:LVS) will allocate some of the capital generated from its $6.25 billion sale of the Venetian and Sands Expo and Convention Center to Marina Bay Sands (MBS) in Singapore.

Marina Bay Sands
Marina Bay Sands in Singapore. Las Vegas Sands will spend more there following its Venetian sale. (Image: Bloomberg)

COO and President Patrick Dumont confirmed the company will direct some of the proceeds from the sale of its Las Vegas Strip assets to its Singapore integrated resort. The disclosure came Thursday during the JPMorgan Gaming, Lodging, Restaurant and Leisure Management Access Forum.

Given the Las Vegas transaction, we are looking to invest more in Singapore at this point,” he said. “We are very privileged to have reached an agreement for a new development there for expanding Marina Bay Sands.”

Last week, LVS announced the sale of the Venetian and Sands Convention Center, ending months of speculation regarding the fate of the venues. Private equity giant Apollo Global Management is acquiring the operating rights while gaming real estate investment trust (REIT) VICI Properties is buying the property. When the transaction closes, it will end LVS’s US presence. But the operator remains keen on expansion opportunities in New York and Texas.

Singapore Makes Sense for LVS Cash

Macau, where Sands operates five integrated resorts, is the largest market for Sands. But Singapore is consistently number two for the company.

In a normal operating environment, MBS consistently generates more earnings before interest, taxes, depreciation and amortization (EBITDA) than the company’s soon-to-be former Las Vegas assets. Along with Resorts World Sentosa, MBS operates as a duopoly in the city-state. It’s a status that is afforded decades-long protection on the basis that the companies expand non-gaming attractions in an effort to woo travelers to the tourist-heavy region.

LVS is planning to spend $3.3 billion in Singapore in exchange for an extension of the duopoly rights. The operator is eyeing a fourth tower, including a posh all-suite hotel and a 15,000-seat arena.

“We are very focused on Marina Bay Sands. We also intend to invest significantly in the existing towers to ensure that [the property] remains competitive in the future,” said Dumont at the JPMorgan conference.

Designed by architect Moshe Safdie, MBS opened in 2010 and cost nearly $6 billion to build. That makes it one of the most expensive gaming properties ever constructed. But LVS is earning ample return on that investment, as the venue is the most profitable integrated resort in the world.

Of Course, Macau

Following the Venetian sale, analysts speculated about how LVS will use that cash, with many saying plenty of that stockpile will be allocated to Macau.

That makes sense because both the Chinese territory and Singapore offer the operator a superior return on investment than Las Vegas. Additionally, Macau gaming permits expire next year, and it won’t hurt operators to show their commitment to the special administrative region (SAR) by making new investments there.

“I believe the Macau government, as part of the license renewal process, will come to us and mandate, or ask us, to spend more dollars, large capital dollars to grow our business, which we would be delighted to spend as much as they want,” said Chairman and CEO Rob Goldstein at the JPMorgan conference.

He added Macau expansion could include enhancing existing venues or even developing a new one.

Goldstein also said that while LVS is out of the running in Japan, Asia remains a region of emphasis for the operator, and “There might be something else happening in Asia that is opportunistic.”