VICI Properties and Apollo Funds Conclude US$6.25B Deal to Acquire Las Vegas Sands’ Venetian Resort and Sands Expo Center

Main Photo: The

Date: April 2021

Location: Las Vegas, Nevada, USA

Name: The Venetian Resort

No. of Keys: Three towers with: 3,015 suites, 1,013 suites, 3,064 suites plus 225,000 sqf of gaming space….and 2.3m sqf of meeting, convention and exhibition space!

Seller: Las Vegas Sands Corporation. They are one of the world’s preeminent developer and operator of world-class Integrated Resorts. Sands created the meetings, incentives, convention and exhibition (MICE)-based Integrated Resort.

Until recently the company was led by the legendary Sheldon Adelson, who sadly passed away in January 2021.

Their properties include the iconic Marina Bay Sands in Singapore. Through majority ownership in Sands China Ltd., they have developed the largest portfolio of properties on the Cotai Strip in Macao, including The Venetian Macao, The Plaza and Four Seasons Hotel Macao, The Londoner Macao and The Parisian Macao, as well as the Sands Macao on the Macao Peninsula.

Buyer: VICI Properties Inc. announced that it has entered into definitive agreements to acquire from Las Vegas Sands Corp. all of the land and real estate assets associated with the Venetian Resort Las Vegas and the Sands Expo and Convention Center, located in Las Vegas, Nevada, collectively, the Venetian Resort, for $4.0 billion in cash, representing a 6.25% cap rate. An affiliate of Apollo Global Management, Inc. has agreed to acquire the operating company of the Venetian Resort for $2.25 billion, subject to customary closing conditions, of which $1.2 billion is in the form of a secured term loan from LVS and the remainder is payable in cash.

Simultaneous with the closing of the transaction, the Company will enter into a triple-net lease agreement for the Venetian Resort with an affiliate of the Apollo Funds. The lease will have an initial total annual rent of $250.0 million and an initial term of 30 years, with two ten-year tenant renewal options.

LVS has agreed to provide lease payment support designed to guarantee the Venetian Resort’s rent obligations under the lease through 2023, with early termination of such lease payment support if the Venetian Resort achieves a certain financial milestone or a tenant change of control occurs.

Rent under the lease will escalate at the greater of 2.0% or CPI (subject to a 3.0% ceiling), beginning the earlier of lease year three or when the Venetian Resort achieves certain financial milestones. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by year end 2021. The Company intends to fund the transaction through a combination of cash on hand, equity and long-term debt financing.

Ed Pitoniak, Chief Executive Officer of VICI Properties, said, “In envisioning and building the Venetian Resort, Sheldon Adelson stands among the great American place-makers of the last 100 years. There are few assets in American commercial real estate that deserve to be called monumental, but the Venetian Resort is truly monumental in both its spatial grandeur and in its economics. Upon closing of the transaction, VICI will be honoured to help steward the legacy of what Mr. Adelson and the Las Vegas Sands team, led by Rob Goldstein and Patrick Dumont, have built.”

John Payne, President and Chief Operating Officer of VICI Properties, said, “We are absolutely thrilled to enhance our portfolio of market-leading experiential assets with the iconic Venetian Resort complex. We have long admired the incomparable size, scale and quality of the Venetian Resort and are proud to opportunistically acquire the asset at an attractive, accretive cap rate for shareholders. Additionally, we are confident Apollo’s vision will greatly benefit the property’s operations for years to come.”

Apollo Partner Alex van Hoek said, “The Venetian Resort is a marquee property in Las Vegas with an unmatched set of amenities to serve guests across hospitality, meeting events, gaming, and entertainment – categories that we believe are well positioned for strong post-Covid recovery and long-term growth. We see significant opportunity to invest in and accelerate the growth of The Venetian Resort and are excited to strengthen and support the talented team there to execute this vision.”

The Venetian Resort Las Vegas features three hotel towers: The Venetian Tower is a 35-storey three-winged luxury hotel tower with 3,015 suites; the second tower is an adjoining 1,013-suite, 12-story Venezia Tower; the Palazzo Tower has 3,064 suites situated in a 50-story luxury hotel tower, which features modern European ambience and design, and is directly connected to The Venetian Tower and Sands Expo Center….. approximately 225,000 square feet of gaming space and approximately 210 table games and 1,480 slot machines and ETGs…..
a variety of amenities for its guests, including a Paiza Club, several theaters and Canyon Ranch SpaClub…..an enclosed retail, dining and entertainment complex, referred to as the Grand Canal Shoppes…and

The Sands Expo Center, one of the largest overall trade show and convention facilities in the United States (as measured by net leasable square footage), with approximately 1.2 million gross square feet of exhibit and meeting space.

The Venetian Resort also contains an approximately 1.1 million-gross-square-foot meeting and conference facility that links Sands Expo Center to The Venetian Resort Las Vegas; together with the Sands Expo Center, the facilities offer approximately 2.3 million gross square feet of state-of-the-art exhibition and meeting facilities that can be configured to provide small, mid-size or large meeting rooms and/or accommodate large-scale multi-media events or trade shows.

This mix of hotel, gaming, food and beverage, entertainment, shopping and meeting and conference features makes the Venetian Resort diversified across multiple sources of revenue
The Venetian Resort and Madison Square Garden Entertainment Corp. are working to bring a 400,000-square-foot venue built specifically for music and entertainment to Las Vegas. MSG is currently building the MSG Sphere at The Venetian, an 18,000-seat venue, which will be located near, with connectivity to, the Venetian Resort and is currently expected to open in 2023.

VICI Properties Inc. is an experiential real estate investment trust that owns one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including the world-renowned Caesars Palace. VICI Properties’ national, geographically diverse portfolio consists of 28 gaming facilities comprising over 47 million square feet and features approximately 17,800 hotel rooms and more than 200 restaurants, bars, nightclubs and sportsbooks.

It’s properties are leased to industry leading gaming and hospitality operators, including Caesars Entertainment, Inc., Century Casinos, Inc., Hard Rock International Inc., JACK Entertainment LLC and Penn National Gaming, Inc. VICI Properties also has an investment in the Chelsea Piers, New York facility and owns four championship golf courses and 34 acres of undeveloped land adjacent to the Las Vegas Strip. VICI Properties’ strategy is to create the nation’s highest quality and most productive experiential real estate portfolio.

Morgan Stanley & Co LLC acted as lead strategic and financial advisor to VICI Properties and Deutsche Bank Securities acted as a financial advisor to VICI Properties on the transaction. Kramer Levin Naftalis & Frankel LLP served as legal advisor and Hogan Lovells served as tax advisor to VICI Properties.

THPT Comment: Wow that’s a serious amount of real-estate! Normally we would show a price per key…in this case $881,274 but this is meaningless if you ignore 2m sqf of convention space not to mention the 225,000 sqf of gaming space!

First Seen: Hospitality Net

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