By Dave Sebastian
Las Vegas Sands Corp. agreed to sell its Las Vegas properties to
Apollo Global Management Inc. and a real-estate investment trust
for about $6.25 billion as the casino operator exits the gambling
hub to focus on its core Asia operations.
Sands' sale of the Venetian Resort and its convention center
comes as the Covid-19 pandemic has roiled the casino industry with
temporary shutdowns, reduced travel and limited occupancies. Hopes
for a recovery in Las Vegas this year depend on how many tourists
and business travelers will return after vaccines are widely
distributed.
The casino operator had said in October that it was considering
a sale of the Vegas assets. After the death of founder Sheldon
Adelson in January, Sands executives said the company would
continue to invest in its Singapore and Macau casinos, which
generate most of the company's revenue.
"As we announce the sale of the Venetian Resort, we pay tribute
to Mr. Adelson's legacy while starting a new chapter in this
company's history, " Chief Executive Officer Robert Goldstein said
Wednesday. "Asia remains the backbone of this company, and our
developments in Macau and Singapore are the center of our
attention."
Sands plans to keep its headquarters in Las Vegas, a spokesman
said. The company has been considering expansion opportunities in
New York and Texas, Sands executives have said, and it will also
explore opportunities in online gambling.
Shares of Sands hit a new 52-week high Wednesday and ended 1.3%
higher at $65.82. The sale could lead Sands to return some of that
money to shareholders, likely through dividends, which had been
paused since last year, Jefferies analyst David Katz said.
Apollo said it sees demand at Las Vegas properties rebounding as
people travel more and business meetings resume.
"This investment also underscores our conviction in a strong
recovery for Las Vegas as vaccines usher in a reopening of leisure
and travel in the United States and across the world," Apollo
partner Alex van Hoek said.
Apollo has previously invested in Vegas casinos. In 2008, Apollo
and TPG completed a $30 billion leveraged buyout of Harrah's
Entertainment Inc., which loaded the company with debt on the eve
of Las Vegas's longest and deepest recession. The company renamed
itself Caesars Entertainment Corp. and in 2015 filed for bankruptcy
protection of its largest unit, which had $18 billion in debt.
Apollo recently has raised its bets on the gambling industry.
The private-equity giant agreed to buy Canadian casino operator
Great Canadian Gaming Corp. in November and eyed U.K. bookmaker
William Hill PLC last year before deciding against making an
offer.
Under the Sands deal, funds tied to Apollo will buy subsidiaries
that hold the operating assets and liabilities of Sands' Las Vegas
business for about $1.05 billion in cash and $1.2 billion in seller
financing in the form of a term loan credit and security agreement,
Sands said. REIT Vici Properties Inc. will buy subsidiaries that
hold the real estate and real-estate-related assets of the Venetian
for about $4 billion in cash.
The Apollo funds will also enter into a long-term lease pact
with Vici for the properties, the companies said.
The Venetian resort comprises a 35-story hotel tower with some
3,000 suites, a 12-story tower with about 1,000 suites and the
50-story Palazzo Tower, which has about 3,000 suites, according to
its 2019 annual securities filing. The resort has about 225,000
square feet of gambling space, the company said in the filing.
The Sands Expo and Convention Center has about 1.2 million gross
square feet of exhibit and meeting space, the company said. It also
has about 1.1 million square feet of meeting and conference
facilities that link the center with the Venetian resort.
The Sands and Mr. Adelson have long been connected with Las
Vegas.
Mr. Adelson launched Computer Dealers Exposition, or Comdex,
which became a hugely successful trade exhibit held in Las Vegas
and other cities. In 1988, needing space for his own exhibition
center in the city to accommodate growing crowds, he bought the
Sands hotel and casino on the Las Vegas Strip for $110 million,
opening up a new line of business.
He tore down the Sands and built in its place the Venetian
Resort, featuring a canal replica with singing gondoliers. His bet
was that conventions and trade shows were a surer way to keep rooms
filled than a pure focus on gambling.
Las Vegas as a conference destination started booming in the
1990s after Mr. Adelson bought his space, said David Schwartz, a
casino historian at the University of Nevada, Las Vegas. Before
that, casinos saw conventions as a way to fill space during the
week, but they weren't a major money maker, he said.
"A lot of people in Las Vegas thought it was a really dumb
thing, but [Mr. Adelson] focused on it," Mr. Schwartz said. "The
demand was there."
The pandemic curtailed much of that travel and caused closures
on the Strip. One in three people in Las Vegas was unemployed in
April 2020 after casinos shut down, pummeling the broader
hospitality industry -- Nevada's biggest employer -- according to
the Bureau of Labor Statistics. In December, the preliminary
unemployment rate in the metro area fell to 10.4%, BLS said.
Business travel for conferences and trade shows is expected to
pick up in the second half of the year, though it will take a few
years until they reach pre-pandemic levels, hospitality executives
have said.
What the deal would mean for the local economy will depend on
the new owners' plans for the properties, Mr. Schwartz said.
Apollo's Mr. van Hoek said the firm sees a "significant opportunity
to invest in and accelerate the growth of the Venetian Resort."
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
March 03, 2021 17:01 ET (22:01 GMT)
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