The Las Vegas Sands casino house is exploring the possibility of ditching its portfolio of Las Vegas resorts as it no longer considers them critical to its business, according to people with knowledge of the matter.
It is understood that Sands is working with an advisor to solicit interest in its Venetian, Palazzo and Sands Expo Convention Center properties. The company can raise $ 6 billion or even more for the two casinos and the convention center that are connected along the Las Vegas Strip.
A sale of its Las Vegas assets would focus the operator’s portfolio and efforts entirely in Asia. The company currently operates integrated complexes in Macau and Singapore and these generated more than 85% of their income last year.
Its casinos in Macau accounted for 63% of the revenue of $ 13.7 billion of the company in 2019, while its Singapore property, Marina Bay Sands, generated 22% of its revenue last year.
Their Las Vegas operations were already a small part of their revenue before the pandemic and they have been doing little to help Sands improve its performance after the first few months of the coronavirus crisis. The company’s chief executive, president and largest shareholder, Sheldon Adelson, said during an earnings call last week that the recovery in Asia has helped Sands improve its operating results during the third quarter of 2020.
Sands confirms sale talks
A representative of the main casino and hotel operator has confirmed that they were in very initial conversations about a possible sale of his business in Las Vegas, but nothing has been finalized yet.
The money that Sands would get from a possible sale would allow the company to finance expansion projects in Asia. The operator has previously disclosed plans to spend $ 2.2 billion in expanding and improving its operations in Macau.
It is also planned to invest at least $ 3.3 billion on the expansion of its Marina Bay Sands property as part of an agreement with the Singapore government announced last year. Sands’ rival Genting Group, which operates Singapore’s other integrated casino complex, Resorts World Sentosa, has pledged the same investment.
In return, the two companies had their duopoly over casino gaming in the extended city-state. until at least 2030.
Analysts say the sale of Sands’ Las Vegas operations makes sense as the Covid-19 pandemic has created interruptions and a lot of uncertainty in the city’s convention business and as an implicit property price represents 12 times the company’s EBITDA.
In Macau, Sands’ subsidiary, Sands China Ltd., is one of six companies that are licensed by local authorities to operate casinos in the city. However, the company’s license expires mid-2022 And while a public bidding process is expected to extend the six licenses in Macau, the process is surrounded by big unknowns.
One of these unknowns is whether Macau legislators would return to select your current casino dealers or they would opt for new ones. The latter option could be very bad news for existing casino operators in the city, including Sands and their plans to focus even more on their Macau business.