Last March, Las Vegas Sands (now just Sands) announced the sale of The Venetian, The Palazzo as well as the Sands Expo & Convention Center for $6.2 billion.
Nearly a year later, the sale of the real estate to VICI and operations to Apollo Global Management (Apollo) is completed.
“We’re thrilled to complete the acquisition of The Venetian, a premier Las Vegas resort that’s backed by a world-class team,” said David Sambur, Apollo Partner and Co-Head of Private Equity.
He continued, “Over the last year, we have only grown more excited by the recovery and outlook for Las Vegas and in particular The Venetian, where we can invest behind an unrivaled set of guest amenities and experiences. Sheldon Adelson was a true visionary in building The Venetian more than two decades ago and we look forward to sustaining its success in this next chapter.”
The Venetian currently has three luxury hotel towers with more than 7,000 all-suite hotel rooms. The casino has 225,000 square feet of gaming space.
There’s a total of 2.3 million square feet of convention and meeting space at The Venetian.
The MSG Sphere is under construction by Madison Square Garden Entertainment across the street behind the casino. When completed, the new entertainment venue will directly connect to The Venetian via a pedestrian bridge.
Apollo isn’t only a casino operator. It’s is an investment company similar to a company like Blackstone, that helped breathe new life into Cosmopolitan. Apollo plans to find new avenues to generate more revenue than the previous owner of The Venetian.
Plans for the Venetian are vague for now
Apollo hasn’t fully disclosed its plans for The Venetian yet. During their hearings with Nevada Gaming Control (and the board) representatives didn’t show its presentation to the public.
There was a vague discussion about possibilities for The Venetian but nothing concrete. Now that Apollo is in charge of operations it can go through the property and its books to completely explore potential new revenue streams.
The biggest change could be to the hotel portion of the property.
During its hearing with the Nevada Gaming Control Board (NGCB), Apollo mentioned a few ways it would like to generate new revenue.
Some ideas included improving food, beverage and entertainment options. There was also talk about adding value to the Grazie Rewards players club.
The other change could be from Apollo exploring adding hotel rooms. The company will explore completing the partially constructed “St. Regis” tower between The Venetian and The Palazzo.
St. Regis is a brand and probably won’t be the name of the tower. It’s just acting as a placeholder for now. The company mentioned also exploring other options for new rooms. Potential locations were not discussed.
New way of selling Las Vegas casinos
Las Vegas casino sales are different than they used to be. Most casino sales on the Vegas Strip have been sold to more than one company.
Combination or split casino sales in Las Vegas have been all the rage over the past few years. Casino operators and real estate companies working together to buy and operate properties is a trend that is likely to continue as prices rise in Las Vegas — particularly on the Vegas Strip.
It’s simply just too expensive for most casino operators to come up with the funds to buy both the real estate and operations of a property.
On the other side of the deal, selling operations and real estate separately is a way for companies to monetize their investments without giving up their business. Over the past couple of years, we’ve seen many Las Vegas casino operators shed land for cash.
While the casino operator is the more important company to remember, it’s helpful to understand how the sales work. The deals could dictate what the future holds for a casino.
MGM And Caesars Lead The Way In Split Casino Deals
It’s no surprise that the two largest casino operators on the Vegas Strip are leading the way in this new type of casino sale.
In 2015, MGM Resorts started a real estate company. MGM Growth Partners currently owns much of the real estate of MGM Resorts properties around the country.
In addition to selling its real estate to MGM Growth Partners, MGM Resorts has also partnered with other real estate companies such as Blackstone.
For example, MGM Resorts owns the operations of Bellagio. Blackstone owns the real estate. There was no impact on visitors at Bellagio when MGM sold the real estate.
Last year MGM Resorts sold its real estate investment trust (REIT) to generate more revenue while the casino business was slow.
VICI started as the real estate arm of Caesars but has been spun off to become its own company. Last year, VICI purchased MGM Growth Partners for $17.2 billion. When the sale closes later this year, VICI will own the majority of real estate on the Vegas Strip.
Here are just a few of the recent Las Vegas casino sales that were split into real estate and operations.
- The Venetian sold operations to Apollo and real estate to VICI.
- Cosmopolitan sold operations to MGM Resorts and real estate to Blackstone.
- The Mirage sold operations to Hard Rock. Blackstone owns the real estate.
- Tropicana sold operations to Bally’s Corp. Gaming & Leisure Properties Inc. (GLPI) owns the real estate.
The Venetian sale is the first to receive approval. MGM Resorts expects the Cosmopolitan sale to become official this summer.
The casino operators are the companies that most casino guests are familiar with. That’s really all most casino guests need to know. This is the part of the property that mostly impacts the casino experience.
Casino operators are in control of the gaming, hotel rooms, shows, restaurants, bars, spas, etc. This is what matters most when visiting a Las Vegas casino.