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LV Sands says may sell Macau retail into fund PDF Print E-mail
Thursday, 16 October 2008
Las Vegas Sands Corp might spin off billions of dollars of Macau retail assets into a property fund, but is under no pressure for a quick sale despite problems funding ambitious casino expansion, an executive said.
The company, which runs the Venetian Macao casino and is building more hotels and casinos in Macau, floated the idea of selling its shops into a listed property trust a couple of years ago.
But with stock markets tanking in the last year, hitting real estate investment trusts (REITs) hard, Las Vegas Sands is now considering packaging the property into a fund for institutional investors.
"It's something we'll look at, whether it's a wholesale fund or a REIT," David Sylvester, the company's head of retail in Asia, said in an interview.
Las Vegas Sands has 1.3 million sq ft of leased retail space at its Grand Canal Shoppes, attached to the Venetian casino, and at the newly opened Four Seasons Hotel next door.
The firm is also building another 850,000 sq ft shopping centre, scheduled to open by the end of 2009 on the Cotai Strip — reclaimed land that Las Vegas Sands Chairman Sheldon Adelson has vowed to turn into a "neon alley" of hotels, casinos and entertainment venues.
"We're talking multiples of billions of dollars," Sylvester said, declining to give an exact value of what he thought the retail assets were worth. He added that Las Vegas Sands would retain a controlling stake in any fund.
"We don't want to sell them off because we want involvement," he said. "Obviously we'd like to have a majority share so we can manage it."
"All the way through we've had property investors interested," he said. "It's blue-chip retail in Asia, which is hard to get your hands on because it's closely held."
With the likes of De Beers, Chanel and Louis Vuitton as tenants, the Four Seasons is raking in $160 per sq ft in retail rent each year, while the Venetian Macao is taking $130.
Retail makes up about a fifth of total revenue at the Venetian Macao. For the full year the Venetian Macao's revenue is forecast to reach $1.97 billion, according to JPMorgan analysts.
Sylvester said the Venetian was better placed than most casinos, because only 27 percent of its visitors were from mainland China.
"With the integrated resort model, based on a three-night stay, we're deliberately going for the broad Asian market," he said.
The average stay now for those who book a hotel room at the Venetian Macao is just under two nights, Sylvester added.
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