MBS parent firm eyeing $5b sale of 49% stake in its Shoppes mall

MBS parent firm eyeing $5b sale of 49% stake in its Shoppes mall
Proceeds from the sale of nearly half of Las Vegas Sands’ stake in The Shoppes at Marina Bay Sands could be used in the company’s next investment in Japan or South Korea.
PHOTO: The Straits Times

Marina Bay Sands (MBS) is looking to sell 49 per cent of its stake in the plush Shoppes mall at a price that could make it the most expensive retail property in the world.

Las Vegas Sands, the parent company of MBS, wants US$3 billion to US$3.5 billion (S$4.3 billion to S$5 billion) for the stake, but it needs the green light from the Singapore Government before a sale can take place.

The agreement that allowed US gaming giant Las Vegas Sands to build the resort and casino stated that the company cannot sell any part of the 800,000 sq ft mall for at least 10 years, and only then after official approval.

Genting Singapore's Resorts World Sentosa complex operates under similar conditions.

The agreements also gave the two companies a 10-year period where they would be the exclusive operators here, giving them a head start in recouping the billions of dollars in construction costs. The 10-year period expires in March.

Las Vegas Sands chairman and chief executive Sheldon Adelson told a results briefing in the United States on Wednesday: "We expect to receive a very significant price for the 49 per cent we are willing to sell. We are looking at potentially US$3 billion to US$3.5 billion."

Mr Adelson said the price would make The Shoppes at Marina Bay Sands "the most expensive mall ever sold in the world".

The sale proceeds could be used in the company's next investment in Japan or South Korea, he added.

Japan recently approved casino gaming within integrated resorts.

Mr Adelson told analysts: "There are more noises coming out of Korea, now that Japan is legalising casino gaming. We will want to see what the development opportunities are. We can always get money to develop properties."

Mr Chew Tiong Heng, executive director for infrastructure planning and management at the Singapore Tourism Board, said MBS has indicated its interest, but the Government has not yet received a formal request for approval.

He added that the Government's approval must be sought if the integrated resort (IR) is to consider any sale or subdivision of the IR after the expiry of the 10-year exclusivity period. This would include the sale and subdivision of MBS' retail areas.

Savills Singapore research head Alan Cheong said Las Vegas Sands is likely selling a 49 per cent stake as the Government could want the company to still have majority control of the mall.

"My guess is the Government doesn't want it to cut and run, or become asset-light and just focus on gambling," Mr Cheong told The Straits Times.

"It wants Las Vegas Sands to still have commitment to its investment in Singapore. On the other hand, Las Vegas Sands may also want to retain majority control because it wants to maintain the mall's position in the retail market."

Mr Cheong said the price is "on the very high side", but it is not an impossible deal.

"Sovereign wealth funds or a consortium of large private equity firms may be interested. There is a lack of available good-quality retail mall stock here. The Shoppes is one such property," he said.

Marina Bay Sands posted a net profit of US$366 million for the fourth quarter, up 8 per cent on the US$339 million recorded a year earlier. Revenue rose 2.8 per cent to US$723 million, helped by a 5.6 per cent increase in gaming turnover to US$563 million.

VIP gaming revenue, which accounted for about 42 per cent of total gaming turnover, fell 18.4 per cent to US$8.26 billion in the three months to Dec 31.

Revenue from some non-gaming segments grew. Hotel room turnover rose 8 per cent to US$95 million, while food and beverage sales were flat at US$55 million. Mall turnover climbed 4.8 per cent to US$44 million.

Parent company Las Vegas Sands reported a net income of US$607 million, up 5.6 per cent, while revenue rose 7.4 per cent to US$3.08 billion.

This article was first published on Jan 28, 2017.
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