LV Sands Amends ‘Cotai Strip' Land Deal

LAS VEGAS-The Macau Government has amended its land concession agreement with Las Vegas Sands Corp., dividing into four parts its new Four Seasons Macau Hotel development, which sits next to its larger Venetian Macau development on Macau’s “Cotai Strip.” LVS has plans for approximately 200 acres of development on the Cotai Strip totaling as much as $11 billion, according to SEC filings.

The Venetian Macau is a 3,000-unit all-suites hotel, casino and convention center complex with a Venetian-style theme similar to that of The Venetian in Las Vegas. In addition to the 39-story hotel tower, the Venetian Macao includes approximately one million sf of retail and dining offerings, and 1.2 million sf of convention and meeting space. The Four Seasons Macau is a 400-room boutique hotel and 80,000-square-foot casino that will eventually include approximately 800,000 sf of Four Seasons-serviced luxury apartments, 210,000 sf of upscale retail.

The amendment to the land concession agreement separates the retail uses of the Four Seasons Macau from the hotel use and creates four separate parts: a 1.2-million-sf piece that includes a five-star hotel with gaming areas, entertainment, leisure, restaurants and other supporting areas; a one-million-sf four-star apartment hotel; a 380,000-sf Shoppes at the Four Seasons retail shopping area and a 339,000-sf parking area.

LVS says it plans to transfer the apartment-hotel tower component to a separate cooperative holding company and begin selling shares in the new holding company to third parties interested in acquiring vacation units at the Four Seasons Private Residences Macao. “The subdivision of the Four Seasons Macao Hotel will also enable VCL to monetize the cash flow generated by the Shoppes at the Four Seasons at an appropriate time in the future,” states LVS in an SEC filing Monday morning.

LVS has plans for six casino-resort developments in addition to the Ventian Macau on 200 acres on the Cotai Strip. It entered into the land concession agreement in February 2007 after it was awarded a land lease concession for three parcels , including the site on which The Venetian Macao was built–parcel 1–and the site on which the Company is building a Four Seasons hotel–parcel 2.

LVS made an initial premium payment of approximately $106.7 million–towards the aggregate land premium for parcels 1, 2 and 3 of approximately $323.9 million–minus a $24.2–million credit it received for reclamation work and other works done on the land and the installation costs of an electrical substation. The land concession became effective in April. In July, LVS paid approximately $102.2 million for the balance of the land premium payment due on parcel 1. The company is required to make additional land premium payments on the remaining parcels 2 and 3, and annual rent payments relating to all three parcels upon the completion of the corresponding resort or be payable through seven equal semi-annual payments, bearing interest at 5% per annum, to be made over a four-year period, whichever comes first.

The amendment to the land concession resulted in an increase in the annual rent payable to the Macau Government associated with the Four Seasons Macao Hotel from approximately $542,000 to $552,000. In addition, LVS was obligated to pay an additional land premium in consideration of the changes of approximately $17.8 million.

The company does not yet have all the necessary Macao government approvals that it will need in order to develop its planned Cotai Strip developments on parcels 3, 5, 6, 7 and 8 but says it is working toward those approvals. Here is a breakdown of what would occur on those parcels. The information was taken from the company’s annual report filed in August.

For Parcel 3, LVS says it has signed a non-binding memorandum of agreement with an independent developer for A 3,600-unit project that would include hotel rooms, serviced luxury vacation suites, a casino and a retail shopping mall. “We are currently negotiating the definitive agreement pursuant to which we will partner with this developer to build a multi-hotel complex, which may include a Cosmopolitan hotel,” the company states in the filing. “In addition, we have signed a non-binding letter of intent with Intercontinental Hotels Group to manage hotels under the Intercontinental and Holiday Inn International brands, and serviced luxury vacation suites under the Intercontinental brand, on the site.”

Parcel 5 is slated to include a three-hotel complex with approximately 2,450 luxury and mid-scale hotel rooms, serviced luxury apartments, a casino and a retail shopping mall. “We will own the entire development and have entered into a management agreement with Shangri-La Hotels and Resorts to manage two hotels under its Shangri-La and Traders brands,” the company states. “In addition, we are negotiating with Starwood Hotels & Resorts Worldwide to manage a hotel and serviced luxury apartments under its St. Regis brand.”

Parcel 6 is intended to include a two-hotel complex with approximately 4,000 luxury and mid-scale hotel rooms, a casino and a retail shopping mall physically connected to the mall in the Shangri-La/Traders hotel podium. “We will own the entire development and are negotiating with Starwood Hotels & Resorts Worldwide to manage the hotels under its Sheraton brand,” the company states.

Parcels 7 and 8 would each hold a two-hotel complex with approximately 3,000 luxury and mid-scale hotel rooms, serviced luxury vacation suites, a casino and retail shopping malls that are physically connected. “We will own the entire development and have entered into non-binding agreements with Hilton Hotels to manage Hilton and Conrad brand hotels and serviced luxury vacation suites on parcel 7 and Fairmont Raffles Holdings to manage Fairmont and Raffles brand hotel complexes and serviced luxury vacation suites on parcel 8,” the company states. “We are currently negotiating definitive agreements with Hilton Hotels and Fairmont Raffles Holdings.”