$4B Venetian sale completed

VICI Properties Inc. has completed the previously announced transaction to acquire all of the land and real estate assets associated with the Venetian Resort Las Vegas and the Venetian Expo and Convention Center Las Vegas for $4 billion in cash, representing a 6.25% cap rate.

The company financed the transaction with proceeds from the settlement of 119 million shares previously raised under its March 2021 and September 2021 forward sale agreements, a $600 million draw under its recently upsized revolving credit facility, and cash on hand.

“In scale and in quality The Venetian is one of the foremost assets in American commercial real estate,” said Edward Pitoniak, VICI’s CEO. “We’re proud to become the long-term stewards of the property envisioned, created and superbly sustained by the Adelson family and the Las Vegas Sands management team.”

Simultaneous with the closing of the transaction, VICI Properties entered into a triple-net lease agreement for the Venetian Resort with an affiliate of funds managed by affiliates of Apollo Global Management Inc. The lease has an initial annual rent of $250 million and an initial term of 30 years, with two 10-year tenant renewal options. Rent under the lease will escalate at the greater of 2% or CPI (subject to a 3% ceiling), beginning the earlier of lease year three or when the Venetian Resort achieves certain financial milestones.

The lease contains customary capital expenditure requirements and Las Vegas Sands Corp. 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 property achieves a certain financial milestone or in the event of a tenant change of control.

Additionally, VICI Properties has the opportunity to fund up to an additional $1.0 billion development at the property through its Partner Property Growth Fund.

“We are thrilled to complete the acquisition of this remarkable world-class asset,” said John Payne, president/COO, VICI Properties. “Over the past two quarters, the Venetian’s financial results far exceeded our initial underwriting expectations, demonstrating the significant attractiveness of the property to consumers and proving the relevance of Las Vegas as a global entertainment destination. We are excited about our partnership with Apollo in Las Vegas and have confidence in their vision for the continued success of the Venetian.”

Las Vegas Sands Chairman/CEO Robert Goldstein said, “The opening of The Venetian more than 20 years ago represents the beginning of the company’s success. The property and, most importantly, the people who represent it every day will always remain indelible parts of our history. Looking forward from the sale, we believe our strong balance sheet and an industry-leading portfolio of integrated resorts in Macao and Singapore, position the company to experience a new era of opportunity and growth.”

The Venetian Resort Las Vegas, built in phases since 1999, features:

  • The 35-story Venetian Tower with 3,015 luxury suites in a three-winged array.
  • The 12-story Venezia Tower with 1,013 suites.
  • The 50-story Palazzo Tower with 3,064 luxury suites and is directly connected to The Venetian Tower and Venetian Expo Center.
  • Approximately 225,000 sq. ft. of gaming space
  • A variety of amenities including the Paiza Club, an exclusive area for premium guests, several theaters and Canyon Ranch SpaClub
  • Approximately 2.3 million gross sq. ft. of exhibition and meeting facilities
  • An approximately 1.1 million-gross-sq.-ft. meeting and conference facility that links Venetian Expo Center to the Venetian Resort Las Vegas
  • An enclosed retail, dining and entertainment complex, referred to as the Grand Canal Shoppes, which is owned by Brookfield Properties

The Venetian Expo Center, one of the largest overall trade show and convention facilities in the U.S. (as measured by net leasable square footage), offers approximately 1.2 million gross sq. ft. of exhibit and meeting space.

VICI Properties also owns the land under the MSG Sphere, a 400,000-sq.-ft. venue built specifically for music and entertainment from Madison Square Garden Entertainment Corp. It is currently expected to open in 2023.

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.

Goldman Sachs & Co. LLC acted as exclusive financial advisor to Las Vegas Sands. Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor.