Casino powerhouse Las Vegas Sands is exploring shedding its Las Vegas portfolio of resorts as it no longer deems these core to its business, according to people with knowledge of the matter.
Sands is understood to be working with an adviser to solicit interest for its Venetian, Palazzo, and Sands Expo Convention Center properties. The company may collect $6 billion or even more for the two casino resorts and the convention center that are all connected along the Las Vegas Strip.
A sale of its Las Vegas assets would concentrate the operator’s portfolio and efforts entirely in Asia. The company currently operates integrated resorts in Macau and Singapore and these generated more than 85% of its revenue last year.
Its casinos in Macau accounted for 63% of the company’s $13.7 billion revenue in 2019, while its Singapore property, Marina Bay Sands, generated 22% of its revenue last year.
Its Las Vegas operations were already a small portion of its revenue before the pandemic and have been doing little to help Sands improve its performance after the first months of the coronavirus crisis. The company’s CEO, Chairman, and largest shareholder, Sheldon Adelson, said during an earnings call last week that a recovery in Asia has helped Sands improve its operating results during the third quarter of 2020.
Sands Confirms Sale Discussions
A representative for the major casino and hospitality operator has confirmed that they were in very early discussions about a potential sale of their Las Vegas business, but nothing has been finalized yet.
The money Sands would fetch from a potential sale would enable the company to fund expansion projects in Asia. The operator has previously unveiled plans to spend $2.2 billion on expanding and upgrading its operations in Macau.
It is also set to invest at least $3.3 billion into expanding its Marina Bay Sands property as part of an agreement with Singapore’s government announced last year. Sands rival Genting Group, which operates Singapore’s other integrated casino resort, Resorts World Sentosa, committed to the same investment.
In exchange, the two companies had their duopoly over casino gambling in the city-state extended to until at least 2030.
Analysts say that a sale of Sands’ Las Vegas operations makes sense as the Covid-19 pandemic has created disruptions and a lot of uncertainty in the city’s convention business and as an implied price for the properties represents 12 times the company’s EBITDA.
In Macau, Sands subsidiary Sands China Ltd. is one of six companies holding licenses from local authorities to operate casino resorts in the city. However, the company’s license is set to expire in mid-2022 and while a public tender process for extending all six licenses is expected to be held in Macau, the process is surrounded by great unknowns.
One of these unknowns is whether Macau lawmakers would reselect its current casino concessionaires or would opt for new ones. The latter option could be very bad news for the city’s existing casino operators, including Sands and its plans to focus even more of its attention on its Macau business.