So is this what awaits Crown Resorts if US investment giant, Blackstone succeeds with its $12.50 a share approach?
One of the justifications Blackstone used in its approach was its extensive experience with casinos and evidenced its presence in Las Vegas, the home of US casinos.
Overnight Monday Blackstone sold out of its Las Vegas involvement, booking a $US4.1 billion profit as it separated the casino from the property in two separate sales.
That is clearly what Blackstone is intending to do with its play for Crown where the Sydney casino can be separated from the huge eyesore of a building at Barangaroo and the Melbourne and Perth casinos can be separated in similar fashion.
Blackstone sold the The Cosmopolitan of Las Vegas hotel and casino for more than $US5.6 billion, more than three times the $1.8 billion it paid for the property seven years ago.
US analysts say Blackstone stands to make $US4.1 billion in profit from the sale while making back close to 10 times the equity it invested in the business
During its ownership, Blackstone spent $US500 million refurbishing the property, including renovating the guest rooms, building luxury suites and adding new bars and restaurants.
The transaction will separate hotel ownership from casino operations, which MGM Resorts International is picking up for about $US1.6 billion.
The property is being sold to a partnership among Blackstone’s REIT, Stonepeak Partners and the Cherng Family Trust for about $US4 billion. So in effect it is selling the property (in part) to another part of its sprawling investment empire.
It’s the latest in major deals in Las Vegas In August, Vici Properties acquired MGM Growth Properties in a $US17.2 billion deal which expanded the company’s portfolio with 15 additional entertainment resorts, including the Excalibur, Luxor and Mirage casinos.
(Vici was formed in 2017 as a spin-off from Caesars Entertainment Corporation as part of its subsidiaries’ bankruptcy plan).
Blackstone has offered $A12.35 a share for Crown, up from a proposal worth $A11.85 a share, with the increased bid valuing Crown at roughly $US6.5 billion.
Given the way the company split up The Cosmopolitan, the plans for Crown would see the three casinos (assuming Blackstone gets regulatory clearance in NSW, Victoria and WA) separated from the various hotels and apartment buildings and packaged up to a new owner, with the rest being sold off to a group of investors, of which part of Blackstone would be a buyer.
But did Blackstone exit Las Vegas casinos too early? MGM’s China Hotels Hong Kong shares fell to an all-time low on Monday on growing fears that it and the five other US casino owners in Macau are going to lose their licences next year when they come due for renewal.
The shares lost more than 10% to $UK4.90. Wynn Macau shares fell more than 4%.
There’s a feeling there will be a flood of American money out of Macau in coming months and into casinos and associated properties in Las Vegas, Australia, Malaysia and Japan.
