Inside Asian Gaming

Oct 2007 | INSIDE ASIAN GAMING 9 Cover Story ers optimistic that volume of visitors will translate into healthy revenue. How appropriate though is monetisa- tion and other creative forms of financ- ing for operators using different business models to LVS and with a different mix of resort facilities? Ashley Wilkins of Societe Generale sug- gests caution is still required:“We have to see the ramp up in Macau and see how the retail performs, because the retail element that supported monetisation in Las Vegas isn’t necessarily going to be the same in Macau. It’s very early days and I don’t think other operators will do it [seek monetisation] until they can gain appropriate value.” Also on the monetisation route? The Marina Bay Sands in Singapore, due to open in 2009,is another obvious candidate for monetisation, though Deutsche Bank’s research analysts Aun-Ling Chia and Karen Tang say in their latest report Asian gaming : Big is better: “It is unclear at this stage if this option is available in Singapore under the licensing agreement. In any case, any sale of property assets within the integrated resorts development would require the Singapore government’s approval.” In Macau two other projects scheduled to open in 2009—City of Dreams from MPEL and Macao Studio City (MSC) a joint venture between New Cotai LLC and East Asia Satel- lite Television Holdings—also have strong real estate components and are likely to take the monetisation route. Analysts say though that if MPEL wants to have the planned condominiums built in time for the first phase opening it will need to raise a further US$359 million. Macao Studio City has a strong real es- tate partner in Singapore-based CapitaLand (which is also part of the consortium for Re- sortsWorld Sentosa,one of the two casino re- sorts planned in Singapore). CapitaLand spe- cialises in real estate financial services and has a track record of successfully leveraging its asset base.The US$2 billion Macao Studio City project will be funded by bank loans and probably some private equity. US-based PE firm Silver Point Capital is coordinating the finance, along with Oaktree Capital Manage- ment, a United Kingdom-regulated indepen- dent investment advisor. In June MSC said it had secured a US$1.2 billion syndicated loan arranged through Deutsche Bank and Mor- ventory. What makes this circle even more virtuous, says DB, is that it frees up several billion dollars in cash flow that would other- wise have to help service debt, and allows it to be used to support returns on equity and build the bottom line. Aggressive monetisation does assume continued strong growth in the Chinese economy and high levels of consumer spending.The fact Venetian Macao reported its millionth visitor only 17 days after open- ing must make LVS’s bankers and sharehold- Marina Bay Sands ArtScience Museum