Two large American companies operating in Macau have reiterated that the Chinese SAR plays a crucial role in the development of their companies.
Las Vegas Sands Chairman Sheldon Adelson said last month that the retail operations and apartments located at the Venetian Macao, Four Seasons and other Cotai Strip developments will go back on the market next year.
When first offered for sale last year during the economic downturn that nearly sunk the company, company officials say the bids that came in weren’t high enough.
“It was an open bid, and we got qualified offers-all cash offers,” Sands China President Steve Jacobs told Global Gaming Business in April. “The cap rates weren’t what we wanted. They were in the 7.5-8 range. Realistically, for that quality of an asset, you should be in the 4.5, 5, 6 range. The asset’s only going to go one direction, and that’s up. Our sales per square foot continue to improve, as we continue to grow month over month. I wouldn’t expect anything on that in 2010, but I would expect management to be aware of the impact, because it’s multibillion-dollar monetization of that when you sell it.”
Adelson, in an interview with Bloomberg News, said he expects to gross at least $12 billion for the assets, which include the malls and apartments at the Four Seasons, and condos under construction at the St. Regis.
“That is our fundamental business model,” Adelson said. “We get our money back from the sale of non-core business assets.”
Meanwhile, Steve Wynn’s threat in April to move the corporate offices of his company, Wynn Resorts, to Macau has some financial legs. The latest quarterly report for Wynn Resorts issued last month showed a dramatic increase in revenue emanating from the Macau operations. Gross revenues for the quarter went from $740 million a year ago to $909 million in the first quarter of 2010. Macau revenue increased more than 30 percent, while Las Vegas revenue was up just over 9 percent.
During an investor call, Wynn re-emphasized that he’s considering moving his corporate offices to Macau to highlight the importance of China to his company, but some suggest that he’s merely trying to escape U.S. taxes and/or protest the policies of the Obama administration, which he opposes. But Wynn says more of his time will be spent in Macau in the next couple of years, so the move is under consideration.
“I don’t intend to uproot everybody who works for me, but it’s becoming appropriate that I spend more of my time in Macau,” Wynn said, now that planning for his third Macau casino is under way. “I intend to begin the process to switch that schedule.”
It’s more likely, however, that the Macau offices will be dedicated to the company that owns some of his Macau assets, a subsidiary of Wynn Resorts.
“We have a public company there for which we are responsible to the Hong Kong exchange and to Chinese institutional investors,” Wynn told investors during a conference call reporting the first-quarter earnings. “We take that very seriously, and I want to make sure that our activities at the high end of the company and the parent company reflect respect for that position.”