Las Vegas Sands Exploring $6B Sale of Its Strip Properties

Las Vegas Sands (LVS) is looking to sell its Strip properties, a Bloomberg report speculates based on information received from unnamed sources. By offloading its Las Vegas casino resorts Sheldon Adelson’s empire would be able to focus on Asian markets, Macau and Singapore, and support the development of other projects.

LVS Soliciting Buyer Interest

According to people with knowledge in the matter, casino mogul and billionaire Sheldon Adelson is seeking an exit from the US market and the company he runs is exploring sale opportunities for the 3 interconnected properties on the Strip, The Venetian, The Palazzo and the Sands Expo Convention Center. The report suggests Las Vegas Sands is working with an adviser to solicit interest for the properties looking to cash in $6 billion from the divestment.

Such a sale for the casino and hospitality operator will make perfect sense as its US business is fairly insignificant contributor to LVS’s total revenue, accounting for only 15% of it in 2019, and a representative from Adelson’s company confirmed an early discussion stage but nothing being finalized.

Offloading its Strip properties will allow LVS to focus entirely on its Asian operations, the casino resorts in Macau and Singapore and the money from the sale could fund other development opportunities. LVS dropped the idea to build an integrated resort in Japan due to unfavorable terms, but a building in New York may be of interest to the 87-year-old casino tycoon who ranked 28^th in the 2020 Forbes Billionaires list.

The mentioned sale price represents 12x earnings before interest, tax, depreciation and amortization (EBITDA) and the uncertainty related to the convention business due to the ongoing virus situation and slump in travel demand will explain the incentive for the sale, but it is not clear who will be willing to buy the casinos.

Macau and Singapore Showing Signs of Improvement

In comparison, LVS’s 6 casino resorts in Macau generated 63% of its $13.7 billion revenue in 2019 and Marina Bay Sands in Singapore accounted for another 22%, but the severe outbreak of the virus affected the casino industry globally. After the initial period of casino closures, Macau imposed travel restrictions which affected the speed of recovery for the business and revenues plummeted for months along with the number of players.

The gradual lift of travel restrictions for the Special Administrative Region (SAR) by the Chinese authorities was not enough as visa restrictions prevented players from returning to the biggest gambling market in the world, but as a visa backlog started to clear, more gamblers are expected to return.

Last week Las Vegas Sands released its third quarter results, posting 82% drop in revenue compared to the same three-month period in 2019, but during the conference call management and major shareholder Adelson sounded upbeat, mainly due to the Asian developments, where Marina Bay Sands had a profitable quarter.