Today marks the end of an era in Las Vegas. Sands will no longer be synonymous with Sin City.
One of the largest casino operators is leaving town, so to speak. This morning, Las Vegas Sands (LVS) announced the sale of all of its Las Vegas businesses. The deal includes the real estate and operations of The Venetian, The Palazzo and the Sands Expo and Convention Center.
Altogether, the sale price was approximately $6.2 billion. The deal hasn’t closed yet and has to be approved by regulators. This process usually takes a while. During an earnings call, Las Vegas Sands says the deal will close in the first quarter of 2022.
What’s included in the deal?
Two companies emerged to acquire the Venetian and its parts.
Apollo Global Management, Inc. is purchasing the subsidiaries that hold the operating assets and liabilities of the LVS business for approximately $1.05 billion in cash. This part of the deal is subject to certain post-closing adjustments and $1.2 billion in seller financing.
Meanwhile, VICI Properties Inc. will purchase subsidiaries that hold the real estate and real estate assets of The Venetian for approximately $4.0 billion in cash.
A big part of this deal is in the name. Las Vegas Sands will become Sands. The company will be ditching the Las Vegas part of its name as quickly as it sold off all Las Vegas assets.
Sands looking towards the future outside of Las Vegas
The sale of The Venetian is a step forward for the company after the passing of its founder Sheldon Adelson last year.
From Las Vegas Sands Chairman and Chief Executive Officer Robert Goldstein:
“The Venetian changed the face of future casino development and cemented Sheldon Adelson’s legacy as one of the most influential people in the history of the gaming and hospitality industry. 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.”
The company has been considering the sale of its Las Vegas assets since last year. LVS will use the revenue from this transaction to reinvest in its Asian properties and explore new casino markets and growth opportunities like online sports betting.
Goldstein explained the mindset behind selling the businesses from where the company started:
“This company is focused on growth, and we see meaningful opportunities on a variety of fronts. Asia remains the backbone of this company and our developments in Macao and Singapore are the center of our attention. We will always look for ways to reinvest in our properties and those communities. There are also potential development opportunities domestically, where we believe significant capital investment will provide a substantial benefit to those jurisdictions while also producing very strong returns for the company.”
While LVS has a plan moving forward, the same can’t be said for the future for The Venetian and The Palazzo at this moment.
The Venetian, The Palazzo, and Sands Expo Center have new owners
The Venetian, The Palazzo and Sands Expo Center will soon have new owners. VICI, a real estate investment trust, owns the real estate at 3355 South Las Vegas Boulevard. Funds managed by one or more affiliates of Apollo, a capital investment firm, will operate the casino, convention center, etc.
A specific existing casino operator for The Venetian hasn’t been announced yet. Caesars will likely hit the rumor mill as the company to operate the luxury casino(s). VICI, the landlord, has ties with Caesars. Additionally, the casino operator has a long history with Apollo.
Prior to this deal, Caesars didn’t appear to have an interest in purchasing another Las Vegas property. During Caesars most recent earnings call, CEO Tom Reeg said the following about future transactions:
“I would say unlikely that we would be buyer of anything material that’s already operating domestically if markets like New York and Texas open up to commercial casinos. We would certainly take a hard look as to whether it would make sense for us to play there.”
If Caesars does not become the operator of The Venetian, there are quite a few possible casino operators rumored to be interested in entering the Las Vegas market. Additionally, one of the two casinos could become an entry point for a new sportsbook operator in Nevada.
Could Caesars take over operations?
William Hill operates the sportsbook at The Venetian after purchasing the rights to the venue from CG Technology. Coincidentally, Caesars acquired William Hill, a deal that should close next quarter.
The sportsbook at The Palazzo, Legasse’s Stadium, closed for good last year due to the coronavirus pandemic. LVS and William Hill have yet to announce if, when and how a sportsbook will reopen at The Palazzo.
More information on future casino operations for The Venetian and The Palazzo should come to light after the deal becomes official.
