Las Vegas Sands Corp. (LVS) is seeking more time to build a planned casino resort in Macau that has yet to break ground less than a year from the deadline for its completion under a government land permit.
The casino operator’s subsidiary, Sands China Ltd. (1928), is in talks to get an extension of the April 2013 time limit the government set to develop a plot called Parcel Three after granting property to build the resort, Melina Leong, a spokeswoman for the company said in a phone interview. The company said in a May U.S. Securities & Exchange Commission filing that it planned to seek the extension.
The deadline shows the hurdles facing casino operators as they expand in Macau, where gambling industry growth is slowing and officials control decisions on casino property. Sands rivals Melco Crown Entertainment Ltd. (6883), SJM Holdings Ltd. (880) and MGM China Holdings Ltd. (2282) are also awaiting land grants or government approvals for construction on the city’s Cotai strip.
“There is no way that Sands is going to meet the deadline,” said Grant Govertsen, an analyst at Union Gaming Group LLC. “It takes three years to build an integrated resort.”
The newest hotel on Parcel Three would be Sands’ biggest project after opening the $5 billion Cotai Central resort in April in the world’s largest gambling hub. Macau officials in 2010 rejected Sands’ application to develop two other plots and the company last month said it withdrew its appeal of the decision.
Sands’s Parcel Three resort would boost the company’s presence on Cotai, a strip of reclaimed land where casino operators are adding resorts to draw more of the Chinese tourists who boosted Macau’s revenue 42 percent last year.
In a May regulatory filing with the U.S. Securities & Exchange Commission, Las Vegas Sands said it would apply for an extension as it would be unable to meet the April deadline. Leong via e-mail confirmed the company still wants the added time and declined to say what the status of any government discussions were.
It’s “almost certain that the company will get the extension,” Govertsen said.
If the extension is not approved, the company could have to take a charge for some or all of its $96.7 million in capitalized construction costs and land premiums as of March 31, 2012, Las Vegas Sands said in the May filing.
The company was initially required to complete the development by August 2011 and the Macau government has already given it one extension, according to the regulatory filing.
“There may even be some upside surprises if Sands manages to finish the Parcel Three project by 2016,” said Govertsen.
Melco Crown Entertainment needs government approval to start construction on its Studio City project. Hong Kong billionaire Stanley Ho’s SJM and MGM China are also waiting for land grants to build on Cotai.
The Macau government usually gives land concessions to casino operators for an initial term of 25 years. The Sands filing says the company is required to pay premiums for each parcel as well as annual rent.
Sands and its competitors are expanding as growth in the former Portuguese colony slows and China’s expansion cools. Macau casino gambling revenue rose 7.3 percent in May, the weakest monthly expansion since July 2009. The hub’s June casino revenue rose 12 percent.
Cotai Central opened in April with 1,800 hotel rooms and is set to expand eventually to 6,400 rooms, with stores, restaurants and meeting space.
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