Iconic casino operator Las Vegas Sands Corp. LVS may be leaving the Vegas Strip, but one analyst says Sands may have a difficult time finding buyers for its Vegas properties at the current asking price.
What Happened? On Monday, Reuters reported Las Vegas Sands is looking for a deal to sell its Las Vegas properties for roughly $6 billion. Those properties include the Sands Expo Convention Center, the Venetian Resort and the Palazzo.
Why It’s Important: The sale of the Vegas properties would mean Sands and CEO Sheldon Adelson would be exiting the Las Vegas market entirely. In 2019, Sands generated about 13% of its total revenue from Las Vegas. Macau is currently Sands’ largest market followed by Singapore.
The sale of its Vegas properties could help Sands pay down its $13.82 billion in outstanding debt, but Bank of America analyst Shaun Kelley said the $6 billion price tag limits the realm of potential buyers.
“The pool of potential buyers who can write $6B checks for any real estate asset is typically small, but post COVID and with negative earnings today, we think it is even smaller and is coupled with much less favorable capital markets,” Kelley wrote in a note.
Instead, he suggested Sands may ultimately opt for an OpCo/PropCo deal similar to the deal MGM Resorts International MGM struck with Blackstone Group Inc BX for the Bellagio in 2019.
Ultimately, Kelley said a deal would likely create value for investors and could be worth anything from $0 to $3 per share for the stock.
Benzinga’s Take: Las Vegas Sands could not have picked a worse time to sell its Vegas assets given Las Vegas Strip gross gaming revenue was down 39% year-over-year in August due to the pandemic.
Investors will be watching to see if there’s any way Sands can find an outright buyer in the $6 billion price range or if the company will have to get more creative to unload its Vegas assets.
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