Sands Completes Las Vegas Asset Sale, Analyst Questions Junk Credit Rating

Posted on: February 24, 2022, 01:25h. 

Last updated on: February 24, 2022, 01:54h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

On Wednesday, Las Vegas Sands (NYSE:LVS) finalized the $6.25 billion sale of its home city assets — Venetian, Palazzo and Venetian Expo — positioning the company to invest heavily in Asia.

Las Vegas Sands
The Venetian on the Las Vegas Strip. Las Vegas Sands’s deal to sell the venue is complete, allowing the company to focus on Asia. (Image: Las Vegas Review Journal)

Private equity titan Apollo Global Management (NYSE:APO) paid $2.25 billion for the operating rights to the venues, while VICI Properties (NYSE:VICI) doled out $4 billion for the real estate assets. With the sale of the aforementioned venues, Las Vegas Sands, at least for now, ends its exposure to Las Vegas and the US at large.

The transaction closed more than two decades after Sands, under the stewardship of the late Sheldon Adelson, opened the Venetian on the Strip. At that time, the integrated resort was one of the glitziest and most expensive in the US. While Sands will maintain its headquarters in Las Vegas, it appears unlikely that the company will reestablish a gaming footprint in the city anytime soon. But never say never.

Las Vegas is continually evolving and is always able to rebound from challenging events like the pandemic and the global financial crisis,” said CEO Rob Goldstein in a statement.

LVS has been rumored to be interested in developing a New York integrated resort, and has been tied to plans to expand casino gaming in Florida and Texas. But those are longer-ranging efforts.

All About Asia Now

Now, Las Vegas Sands will focus squarely on Asia, where it runs six gaming venues.

In Macau, where Sands runs five integrated resorts and is the market share leader, the operator could direct some proceeds from the sale of the Nevada venues to bolstering non-gaming amenities to gain favor among local regulators. The company recently said it’s planning $1 billion in upgrades to Marina Bay Sands in Singapore.

“Our commitment to long-term investment in Asia is highlighted by the recently announced $1 billion reinvestment at Marina Bay Sands in Singapore and the completion of the $2.2 billion renovation of The Londoner (Macau), and we will continue to place a premium on growing our industry-leading resorts in Asia,” said COO and President Patrick Dumont in a statement.

Macau is the world’s largest gaming market, and LVS is the biggest operator by market share there. Prior to the coronavirus pandemic, Marina Bay Sands was the most profitable integrated resort in the world.

Credit Questions

Last week, Standard & Poor’s (S&P) stripped Las Vegas Sands (NYSE:LVS) of its investment-grade credit rating due to a sluggish pace of recovery in Macau. The research firm pared its ratings on LVS and the operator’s Sands China unit to “BB+,”or one notch into junk territory, from “BBB-.”

However, noted gaming analyst Howard Jay Klein takes issue with S&P’s decision, highlighting LVS’s strong balance sheet, narrowing losses in Asia, and the removal of Macau regulatory uncertainty.

“It is hard to fathom why at this time S&P believed a downgrade was in order,” Klein wrote in a recent report.