In March of last year, Las Vegas Sands, now known simply as Sands, declared they were selling The Venetian, The Palazzo, and the Sands Expo & Convention Center for a sum of $6.2 billion.
Almost a year later, the sale of the real estate to VICI and operations to Apollo Global Management (Apollo) has been finalized.
David Sambur, Apollo Partner and Co-Head of Private Equity, expressed his excitement about finalizing the purchase of The Venetian, a top-tier Las Vegas resort supported by an exceptional team.
He went on to say, “Our enthusiasm for Las Vegas’s recovery and future, especially for The Venetian, has only increased over the past year. We’re eager to invest in its unparalleled range of guest facilities and experiences. Sheldon Adelson, who built The Venetian over twenty years ago, was a real visionary. We are looking forward to carrying on the success of this establishment in the coming chapter.”
Currently, The Venetian boasts three luxury hotel towers comprising over 7,000 all-suite rooms. The casino occupies a gaming space of 225,000 square feet.
The Venetian has a total convention and meeting space of 2.3 million square feet.
Madison Square Garden Entertainment is currently constructing the MSG Sphere behind the casino, right across the street. Once finished, this new entertainment venue will have a direct connection to The Venetian through a pedestrian bridge.
Apollo is not just a casino operator, it is also an investment company akin to Blackstone, which revitalized Cosmopolitan. Apollo aims to identify new ways to generate more revenue than The Venetian’s previous owner.
Plans for the Venetian are vague for now
Apollo has not yet revealed its complete plans for The Venetian. Its representatives did not make their presentation public during the hearings with the Nevada Gaming Control and the board.
A nebulous conversation took place regarding potential prospects for The Venetian, but no definite plans were made. However, now that Apollo is overseeing operations, it has the opportunity to thoroughly examine the property and its financial records to unearth new potential sources of income.
The most significant alteration could be to the hotel section of the property.
In its hearing with the Nevada Gaming Control Board (NGCB), Apollo outlined several strategies for generating new revenue.
Some suggestions included enhancing the options for food, drinks, and entertainment. Discussions also revolved around increasing the value of the Grazie Rewards players club.
Another potential change could stem from Apollo considering the addition of hotel rooms. The company aims to explore the completion of the partially built “St. Regis” tower situated between The Venetian and The Palazzo.
The brand St. Regis is currently serving as a temporary name for the tower, but it likely won’t be the final choice. The company is also considering various alternatives for new rooms, though no specific locations were mentioned.
New way of selling Las Vegas casinos
Sales in Las Vegas casinos have changed from how they used to be. The majority of casino sales on the Vegas Strip have involved multiple companies.
The trend of partnering casino operators and real estate companies to purchase and manage properties has been popular in Las Vegas over recent years. This trend, known as combination or split casino sales, is expected to persist, especially on the Vegas Strip, as property prices continue to escalate.
The cost of purchasing both the real estate and operations of a property is simply too high for most casino operators.
Conversely, companies can monetize their investments without relinquishing their business by selling operations and real estate separately. Over the past few years, numerous Las Vegas casino operators have sold their land for cash.
Although remembering the casino operator is crucial, understanding how the sales operate is also beneficial. The transactions could potentially determine the future of a casino.
MGM And Caesars Lead The Way In Split Casino Deals
The fact that the two largest casino operators on the Vegas Strip are spearheading this new type of casino sale is not surprising.
MGM Resorts initiated a real estate company in 2015 known as MGM Growth Partners, which now owns a significant portion of the real estate assets of MGM Resorts properties across the nation.
Besides selling its real estate to MGM Growth Partners, MGM Resorts has also formed partnerships with other real estate firms like Blackstone.
For instance, the operations of Bellagio are owned by MGM Resorts, while the real estate is owned by Blackstone. Despite MGM selling the real estate, there was no impact on the visitors at Bellagio.
MGM Resorts sold its real estate investment trust (REIT) last year to boost revenue amid a slowdown in the casino business.
Originally the real estate division of Caesars, VICI has since been spun off to form its own independent entity. In the previous year, VICI acquired MGM Growth Partners for a sum of $17.2 billion. Following the closure of this sale later this year, the majority of real estate on the Vegas Strip will be under VICI’s ownership.
Here are a few recent sales of Las Vegas casinos that were divided into real estate and operations.
- Operations at The Venetian were sold to Apollo, while the real estate was sold to VICI.
- MGM Resorts purchased operations from Cosmopolitan, while Blackstone bought their real estate.
- The operations of The Mirage were sold to Hard Rock, while Blackstone owns the real estate.
- Bally’s Corp purchased operations from Tropicana, while the real estate is owned by Gaming & Leisure Properties Inc. (GLPI).
The sale of The Venetian is the first to get approval. This summer, MGM Resorts anticipates the official sale of the Cosmopolitan.
Most casino guests are familiar with the companies operating the casinos. Essentially, that’s all they need to know. This aspect of the property significantly influences the overall casino experience.
When visiting a Las Vegas casino, what matters most is that the casino operators are in control of the gaming, hotel rooms, shows, restaurants, bars, spas, etc.
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