Sands sells Las Vegas Strip properties for $6.25B
Las Vegas Sands Corp. has sold The Venetian, its flagship Strip resort, and the rest of its Las Vegas properties in a multibillion-dollar deal that shakes up Nevada’s gaming industry.
Affiliates of Apollo Global Management Inc. and Vici Properties Inc. will acquire subsidiaries that hold the real estate and operations of the Strip’s famed Venetian and Palazzo resorts and the Sands Expo and Convention Center for $6.25 billion, Sands officials announced early Wednesday.
The transaction also was disclosed in filings to the Securities and Exchange Commission.
Sands executives said in October they were considering offers for the Las Vegas properties so they could focus on the lucrative operations of their market-leading six resorts in Macao and their iconic hotel-casino in Singapore.
Under terms of the deal, New York-based Apollo, founded by real estate investor and former CEO Leon Black, would pay $1.05 billion in cash and $1.2 billion in seller financing in the form of a term loan credit and security agreement. New York-based Vici, a real estate investment trust affiliated with Caesars Entertainment Inc., would pay $4 billion.
The transaction is subject to customary closing conditions, including regulatory approvals.
The buyers
Under the deal, Vici will own the real estate and Apollo will own the cash flow from the operations and pay Vici rent.
Las Vegas Sands executives are expected to relocate once the sale closes, likely by the end of the year.
Just who will operate the resort/convention complex and employ its workforce after the sale is an unknown. Apollo, which excels in real estate management, doesn’t specialize in the day-to-day operations of its leisure portfolio.
Apollo’s investments have included resorts, airlines and cruise lines. It invested in Harrah’s Entertainment — one of the predecessors to Caesars Entertainment Inc. — in 2006 and in Las Vegas-based timeshare company Diamond Resorts International in 2016.
Vici Properties owns five resorts in Nevada — two on the Strip — and 23 others across the country. In Las Vegas, it owns Caesars Palace and Harrah’s, representing 213,000 square feet of casino space, 3,000 slot machines and table games and 6,510 hotel rooms. Caesars Entertainment continues to manage those properties for Vici.
Vici also owns Harvey’s Lake Tahoe and Harrah’s Lake Tahoe at Stateline, and Harrah’s Laughlin in Southern Nevada.
Morgan Stanley & Co. LLC acted as lead strategic and financial adviser to Vici Properties, and Deutsche Bank Securities acted as a financial adviser to Vici on the transaction. Kramer Levin Naftalis & Frankel LLP served as legal adviser and Hogan Lovells served as tax adviser to Vici Properties.
Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel to the Apollo Funds. Eastdil Secured acted as real estate adviser to Apollo.
Goldman Sachs & Co. LLC acted as exclusive financial adviser to Las Vegas Sands. Skadden, Arps, Slate, Meagher & Flom LLP served as legal adviser.
Joseph Greff, a gaming industry analyst with New York-based J.P. Morgan, said Wednesday that Las Vegas Sands made a great deal for the sale of the assets.
“From our perspective, this is a great price, higher than the $3.7 billion of value we ascribe (and) … would add $2.5 billion, or $3.31 of incremental equity value per share,” Greff said in a report to investors. “As such, we don’t think Las Vegas Sands left any value on the table.”
‘Starting a new chapter’
Sands executives said Wednesday that it would be bittersweet selling The Venetian, the 21-year-old resort that catapulted the company into the world’s largest gaming operator, but the opportunities to pursue new growth prospects would be robust.
“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,” Las Vegas Sands Chairman and CEO Rob Goldstein said.
Adelson, the company’s founder, died Jan. 11 at age 87 at his home in Malibu, California, from complications related to treatment for non-Hodgkin lymphoma.
“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,” Goldstein said. “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.”
Exploring opportunities
Goldstein said the company will always look for ways to reinvest in its properties and their communities and that there are new domestic development opportunities.
“Our long-held strategy of reinvesting in our Asian operations and returning capital to our shareholders will be enhanced through this transaction,” said Patrick Dumont, the company’s president and chief operating officer. “Additionally, as our industry continues to evolve, particularly as it relates to the digital marketplace, we are committed to exploring those possibilities.”
Goldstein, who once served as the president and chief operating officer of The Venetian and the connected Palazzo, said it would be difficult saying goodbye to many longtime colleagues, but he was confident the property would continue its great success.
“(The Venetian) is a best-in-class asset with a talented team of people operating it,” he said. “I am confident Las Vegas will soon return to a more normal operating environment and The Venetian’s hardworking and dedicated team members will continue delivering a world-class experience to guests eager to enjoy it. I know I will be rooting for them.”
He also said Apollo and Vici were the right companies to lead the property into the future and that additions such as the MSG Sphere, a live performance venue being developed by Madison Square Garden, would create new growth opportunities for the property.
‘Irreplaceable asset’
Apollo Partner Alex van Hoek praised The Venetian’s “unrivaled set of amenities to serve guests across hospitality, meeting events, gaming, and entertainment — categories that we believe are well positioned for strong recovery and long-term growth.”
“The team at Las Vegas Sands, under the leadership and vision of Sheldon Adelson, built an irreplaceable asset that is renowned for its quality, scale and integrated offerings, and we see significant opportunity to invest in and accelerate its growth,” van Hoek said. “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.”
The casino industry, in Las Vegas and abroad, has been pummeled over the past year by restrictions imposed by governments in response to the COVID-19 pandemic.
In Nevada, casinos were closed for 78 days last year beginning March 17 to slow the spread of the virus.
John Payne, president and chief operating officer of Vici Properties, called The Venetian “one of the most coveted properties in Las Vegas and a premier destination for gaming, business and leisure alike.”
“We are thrilled to add The Venetian to our roster of best-in-class assets and believe the property is positioned to benefit from a rebound in Las Vegas under Apollo’s leadership. We look forward to what we expect will be a mutually beneficial and productive relationship with Apollo.”
Representatives of the Madison Square Garden Entertainment Corp. said the transaction would not affect construction of the $1.66 billion MSG Sphere at The Venetian, the 17,500-seat entertainment venue being built on Sands property just east of the Sands Expo & Convention Center.
“Las Vegas Sands has been a great partner, and we look forward to working with Apollo as we continue to make important progress on our MSG Sphere venue,” a spokesperson for the company said in an email Wednesday.
Las Vegas Sands stock, traded on the New York Stock Exchange, closed up 87 cents, 1.3 percent, to $65.82 a share in heavy trading. After hours, shares slid slightly by 16 cents, 0.2 percent, to $65.66 a share.
Vici shares, also traded on the New York Stock Exchange, closed up 71 cents, 2.5 percent, to $29.19 a share on volume nearly twice the normal average. After hours, it dropped 14 cents, 0.5 percent, to $29.05 a share.
The Review-Journal is owned by the family of Sheldon Adelson, the late chairman and CEO of Las Vegas Sands Corp.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.
What's included in the transaction
Three hotel towers are included in the deal: the Venetian Tower, a 35-story, three-winged building with 3,015 suites; the Palazzo Tower, a 50-story building with 3,064 suites; and the Venezia Tower, a 12-story building with 1,013 suites.
The resort's casino includes 225,000 square feet of gaming space, 210 table games and 1,480 slot machines and electronic table games. There is also a variety of amenities for guests including several theaters and restaurants and the Canyon Ranch SpaClub.
The deal also includes the Sands Expo and Convention Center, one of the largest convention and trade show facilities in the United States with 1.2 million square feet of leasable display space on multiple floors.
The Venetian also has 1.1 million gross square feet of ballrooms, meeting space and conference rooms connected to the Sands Expo Center, providing a total of 2.3 million square feet of space that can be configured for small, mid-sized or large gatherings or multimedia events.
It also houses an enclosed retail, dining and entertainment complex known as the Grand Canal Shoppes that includes meandering water-filled canals, gondolas and gondoliers as well as representations of landmarks from Venice, Italy.
