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Las Vegas Sands Wants to Cash In on Singapore

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The chips are piling up at Las Vegas Sands (NYSE: LVS  ) , and Sheldon Adelson is eyeing a way to cash them in.

The company said this week that it wants to sell its mall at Marina Bay Sands for an astounding $4 billion in the next few years. This is a similar strategy to what Las Vegas Sands did in Las Vegas at The Venetian.

The first phase of The Venetian was built for $1.5 billion in the late '90s, and in 2004 The Grand Canal Shops at the casino were sold to General Growth Properties (NYSE: GGP  ) for $766 million. Grand plans for a similar model in Macau have yet to take shape, but asset sales there could happen in the future as well.

Competitors Wynn Resorts (Nasdaq: WYNN  ) and Melco Crown (Nasdaq: MPEL  ) haven't followed a similar model of selling off non-core assets to pay for construction costs in their casinos. MGM Resorts (NYSE: MGM  ) made an attempt with CityCenter, trying to sell condos in the development, but that attempt blew up in its face and has resulted in massive writedowns since the condo bubble burst.

It remains to be seen what Las Vegas Sands could sell the Marina Bay Sands mall for and when it may happen, but investors would be happy to see it happen. Gambling is the true cash cow in Asia, and if you can pay for a major portion of a new casino by selling the attached mall, the resulting return on assets goes through the roof.  Still, it's not all smooth sailing in Singapore.

Restrictions in Singapore
Singapore officials have told Las Vegas Sands that no more than 30% of visitors to the Marina Bay Sands casino should be Singaporean, according to reports. The Singapore government views the casinos as tourist destinations and doesn't want the domestic market supporting gaming.

No word whether casino bouncers will be given tally counters to ensure compliance.

Interested in reading more about gaming stocks? Add MGM, WYNN, LVS, and MPEL to My Watchlist, and My Watchlist will find all of our Foolish analysis on these stocks.

Fool contributor Travis Hoium owns shares of Melco Crown that are covered with call options and is long Las Vegas Sands via put options. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Motley Fool newsletter services have recommended buying shares of Melco Crown Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (2)

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  • Report this Comment On June 10, 2011, at 8:56 PM, Pkylie wrote:

    Sheldon Adelson can say whatever he wants, he has been proven wrong time and again. Macau will NOT permit LVS selling real estate there. The land they got for building those casinos came with a lower cost basis than residential properties and allowing LVS to sell those hotel suites will cause a mutiny among the residential real estate developers.

    Singapore government will likely not permit MBS to sell the Mall space either. MBS 's gambling business until now is 65% local Singaporeans, and the Singapore government informed MBS they must abide by a 30% local visitation rule.

    All spells trouble for LVS going forward, reduced business at MBS, new competitor in Galaxy in Macau and yes, a multitude of criminal investigations pending.

  • Report this Comment On June 10, 2011, at 11:27 PM, Odysseus221 wrote:

    Sheldon is a very very shrewd person. I think this stock is a great short story.

  • Report this Comment On June 11, 2011, at 2:53 PM, rodrigcs wrote:

    The condo's in Macau, according to Adelson during their conference call: "We're not selling residences here. We're selling, what we call vacation suites. We don't want to just sell real estate and pick up dollars, although that's a nice thing to do.

    We want to sell reasons for people to visit. We want our cake and eat it too. We want people to pay us a lot of money for these residences that they use when they come to visit. We don't want a residential tower. We want units that wealthy people buy, so they have their own place on the Coati Strip, similar to the market that we're focusing on here in Las Vegas. We want that tower not to be quote unquote residences per say. We want them to be residences for wealthy people that want their own place on the Strip."

    Adelson isn't opening an apartment complex, they're condos for the extremely wealthy who want to come visit a few times a year...

    As for Singapore, MBS in its first quarter brought in an EBITDA of $284.5 million and net revenues of $584.9 million. Not too shabby for not being fully operational. Check their earning reports if you doubt they're making money there. The city-state needs the tourism and income that these casino's generate via taxes. The market can only expand, tourism is increasing - up to over 11 million visitors in 2010. Singapore's "Business Times" reported that LVS has been keeping within the 30% limit set forth by the government.

  • Report this Comment On June 11, 2011, at 3:24 PM, JF125780 wrote:

    Great comment rodrigcs, I was wondering why Adelson was selling real estate.


    Dan Kowkabany

  • Report this Comment On June 11, 2011, at 7:32 PM, Pkylie wrote:

    MBS 's best days in Singapore are over. They have to pare visitation by locals from 65% to 30%. Never mind what Leven said, If MBS has already achieved the 30% goal set by SIngapore's govt, the govt wouldn't have reminded LVS a second time.

    As to Macau apartments, they were to be sold as apartments until challenged by residential developers in Macau, forcing Adelson to backtrack to the drawing board to come up with something they think might be acceptable to Macau, like timeshare/coops. FAT chance.

    Why would anyone buy from a known crook ?

    So how's the timeshare thing working at the Palazzo ? or the shell of an abandoned high end condo unit next to palazzo ?

    Keep pumping, Rodrigcs, you are a waste of space and a shill.

    The facts are clear, Adelson will not have his Macau gaming license renewed past 2020. Of course, by then he most likely will be long Dead.

  • Report this Comment On June 14, 2011, at 12:07 AM, rodrigcs wrote:

    Pyklie, If you'd be so kind as to post where your getting your information from, I'm sure the community would appreciate it as well...otherwise they're baseless claims. The information I gave out is readily available online, I have not said anything that can't be verified by a search on google.

    The Singapore government really only issued a warning, as the 30% ratio is not set by law. As I mentioned that one of Singapore's goals is international tourism, both of which are promoted by the integrated resorts of Genting and MBS.

    Adelson wasn't trying to open up an apartment complex in Macau, he is trying to do exactly the same thing they did in Vegas by selling off non-core assets. An effective business strategy and not a difficult concept to grasp

    As for Macau and MBS, in gets things done. And by their very nature all the casinos there will have an influx of money moved in and out by Triads, and other unscrupulous individuals. Not every dollar can be accounted for, and if that keeps you up at night you shouldn't have any positons in the vice stocks.

    As for facts, you haven't presented any. No one can predict what Macau will be by 2020, your guess is as good as mine. I'd imagine one of Asia's premiere gaming destinations, especially once all of LVS's developments are completed. If the region continues to develop and the Communist government continues to enjoy the heavy income stream that Macau generates I'm sure LVS will be just fine. They wouldn't undertake such a massive building project if there was a chance there properties would be seized by the government or shutdown.

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