Singapore’s Marina Bay Sands to Receive $1B in Upgrades from Sands

[The_King]

Sands (LVS) has begun a $1-billion “renovation project” of the hotel accommodations at its Marina Bay Sands (MBS) casino resort in Singapore. Robert Goldstein, chairman and CEO of the group, confirmed the massive project during an earnings call on Wednesday.

The upgrade will bring “luxurious suite products” to the property, according to Goldstein. He added that the endeavor will “significantly enhance” the company’s appeal to premium clients.

It has long been thought that Singapore had the potential to become a casino powerhouse. That goal hasn’t been realized. However, changes in Macau could serve as a catalyst for the country’s gambling growth. Spending over $4.4 billion on upgrades can only come after careful consideration of what the future holds.

MBS Faces Upgrade Delays

LVS has had to slow down on its required upgrades at MBS because of COVID-19. It received extended exclusivity in return for promised upgrades worth $3.3 billion. However, those are reportedly not included in the additional injection of funds announced on Wednesday.

The expansion work is on track for completion by 2026, according to the same presentation materials from Wednesday. In the group’s third-quarter earnings presentation last year, it stated that the target was 2025.

Alvin Tan Sheng Hui, Singapore’s Minister of State, Trade and Industry, stated earlier this month that it was unclear if the city’s planned expansion of its two integrated resorts will face delays. Any problems could be because of disruptions in the construction industry as a result of the COVID-19 pandemic.

Sanford C. Bernstein Ltd brokerage analyst Vitaly Umansky confirmed the new funding was in addition to the original $3.3-billion commitment. He’s confident that the investment will be worthwhile, saying that they will “yield good returns” once complete.

Singapore Casinos Subject to Higher Taxes

The annual tax rate for mass gross gaming revenues (GGR) in Singapore will change from a flat rate at 15% to an 18% rate starting in March. This applies to the first SGD3.1 billion (US$2.29 billion) of GGR collected by the operator. Mass GGR exceeding that amount will be subject to a 22% tax.

GGR of premium or VIP status is currently subject to a flat rate of 5% in Singapore. The new tiered model will see the first SGD2.4 billion (US$1.77 billion) worth of GGR taxed at 8%. Premium GGR above that amount will be subject to 12%.

Sands stated in its most recent presentation deck that it expects to receive cash from the $6.25-billion sale of its Las Vegas properties, including Sands Expo and The Venetian. It also anticipates that these transactions should finalize by the end of the first quarter of this year.

According to the fourth-quarter results, the total amount of debt outstanding by the group, including finance leases, was $14.77 billion as of December 31, 2021.