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Las Vegas Sands Management Discusses Q3 2012 Results - Earnings Call Transcript

Executives

Daniel J. Briggs - Vice President of Investor Relations

Sheldon Gary Adelson - Chairman, Chief Executive Officer, Treasurer, Chairman of Las Vegas Sands Llc, Chairman of Sands China Ltd and Chief Executive Officer of Las Vegas Sands Llc

Michael Alan Leven - President, Chief Operating Officer, Secretary, Director, Chairman of Advisory Committee, Acting Chief Executive Officer of Sands China Ltd, President of Las Vegas Sands LLC and Chief Operating Officer of Las Vegas Sands LLC

Kenneth J. Kay - Chief Financial Officer and Executive Vice President

Robert G. Goldstein - Executive Vice President and President of Global Gaming Operations

Analysts

Mark Strawn - Morgan Stanley, Research Division

Joseph Greff - JP Morgan Chase & Co, Research Division

Shaun C. Kelley - BofA Merrill Lynch, Research Division

Felicia R. Hendrix - Barclays Capital, Research Division

Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division

Steven E. Kent - Goldman Sachs Group Inc., Research Division

Carlo Santarelli - Deutsche Bank AG, Research Division

Operator

Good afternoon. My name is Amanda and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Corporation Third Quarter Earnings Conference Call. [Operator Instructions] Mr. Daniel Briggs, Vice President of Investor Relations, you may begin your conference.

Daniel J. Briggs

Thank you very much. Before I turn the call over to Mr. Adelson, let me remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor provisions of Federal Securities Laws. The company's actual results could differ materially from the anticipated results in those forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for a discussion of risks that may affect our results.

In addition, we may discuss adjusted net income, adjusted diluted EPS, and adjusted property EBITDA, which are non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release. Please note that this presentation is being recorded. We also want to let you know that we have posted supplementary earnings slides available on our Investor Relations website for your use.

With that, let me please introduce our Chairman, Mr. Sheldon G. Anderson.

Sheldon Gary Adelson

Thank you, Dan. Good afternoon, everyone, and thank you for joining us today. By now, you should've seen our press release and the related earnings materials, which are available on our website. Joining me in the call today are Mike, Rob, Chris and Ken. As the Founding Chairman and CEO of Las Vegas Sands and the company's Chief Strategist, I'm focused on delivering growth and maximizing shareholder value. I think about our company assume these goals in 4 key areas: One, organic growth in existing properties; two, development of growth that's within our reach today; three, development of integrated resort locations new to Las Vegas Sands; and four, return of capital to shareholders through our annual dividends. To address point 1, our organic growth at our existing properties, I would like to go through some highlights for the quarter in Macau for our industry-leading table, and infrastructure investments are creating impressive results in the largest and most profitable gaming market in the world. Our quarterly results in Macau reflect company records in virtually every category, and we expect our operating momentum to continue in the quarters ahead. For the quarter, our market share gross Gaming revenue on Macau was 19.3%, up from 14.3% last year. That is a 35% growth in market share. I just -- well, I'd also like to mention that our EBITDA numbers surpass any one of our competitors at any market share. I just want to mention that at reports we saw this morning, our market share gain in October in Macau was in excess of 20%, again, demonstrating that we're growing faster than the market as our investments and strategies produce results. Our rolling book on the third -- I'm sorry, rolling volume was up 45.5% this quarter to a record USD 36 billion. That represents pip market share of approximately 17% of rolling volume for the quarter compared to just 11.4% one year ago. If you remember, at that time, I said we were getting back into the good graces of the jacket reps [ph], and this 49.1% increase in market share of rolling volume attest to that. Our rolling volume was at 54% during the quarter, while the general Macau market was down 1% for the same period. That is really spectacular. While everyone else is experiencing declining margins in their VIP business, we're delivering strong growth. Equally impressive is our strong organic growth and momentum in the mass table in Macau. Due to its high margin structure, this segment is even more important to our future cash flow and bottom line results. Our non-rolling table win in Macau for the quarter was up 36.4% to more than $658.4 million, another company record. Our table productivity also improved meaningfully this quarter with win per mass table across our portfolio of properties expanding year-over-year by 26% to reach nearly USD 8,700 per table. Remember that we have the largest footprint in Macau. That's because we took our original strategy, called for us to take certain risks and the risks which are far beyond our expectations, except for Sheldon Adelson's expectations. I thought it was going to be a grand slam home run, and I was wrong. It was a grand slam home run, the world series of tennis, not to mention the ping-pong and the Super Bowl. Probably [indiscernible] all of that. Our table productivity has also improved meaningfully this quarter, with win per mass table across that portfolio to $8,700.

Now I'm turning to Singapore. We had a very light this quarter with Singapore at just 1.79%. That was really a low, low. And it cost us about $105 million on EBITDA during the quarter. So on a whole adjusted basis, we would have produced EBITDA at just under $355 million this quarter from Singapore, but it went skyline. As Singapore continues to progress as a destination for business and leisure travel and entertainment and our marketing programs in the Asian region mature, our business at Marina Bay Sands will continue to grow. [indiscernible] marketing programs support the premium mass-market and VIP markets, beefing up our sales force and investing in aircraft. The customers, we are targeting with big difference. They will come from the areas surrounding Singapore: Indonesia, Malaysia, Thailand and the larger Southeast Asian region, as well as from Hong Kong, Taiwan, China, Japan and Korea. I think I missed Vietnam, meaning we didn't get a significant amount of business from Vietnam. Culture development growth, that is within reach today. We will generate substantial growth from our resorts in Macau at Sands Cotai Central [indiscernible] and as we are able to develop the per region on site fee.

Turning to Sands Cotai Central, mass table and slot business -- I shut my phone off, sorry. Turning to Sands Cotai Central, mass table and slot business reflected meaningful growth this quarter. Total mass win per day increased by 15% compared to the partial quarter ended June 30 and reached $1.56 million per day. We see strong operating momentum continue in the quarters ahead, particularly as the addition of hotel, dining, shopping and entertainment amenities of Phase 2 of Sands Cotai Central we did to make their target reaches. Because those amenities will open only for 11 days during the quarter, the [indiscernible] for this quarter [indiscernible]. As a reminder, since April of 2012, we have opened more than 3,660 new hotel rooms and 2 new casinos in Macau. And in addition, we will open 2,000 new hotel rooms in January 2013. That's great. I'd also like to say that our concept of bringing in international brands is paying up handsomely. We're running at very high occupancy rates in the hotel, we're bringing in business. The people have questioned Holiday Inn, but Holiday Inn has one of the extremely high rates. The Conrad has more demand than it has supply, and the Sheridan just opened recently last month and we're doing splendidly at the Sheraton. We still have one more hotel to go, which will open, I suspect, within the next 90 days. The strategic advantages of the scale and critical mass of our portfolio products on the Cotai Strip, including the air-condition and people move with pedestrian bridge, which will open in December, connecting Cotai Central with the Four Seasons and The Venetian on the west side of the strip, will benefit all of our properties on Cotai and strengthen the retail of our business. As the Macau market continues to grow, we continue to plan for the not too distant future, where Sands Cotai Central will have the opportunity to produce financial results that rival those of The Venetian hotel. The Parisian Macao will add another integrated resort property to our portfolio in the Cotai Strip. We're targeting it in late '15 or earlier. We've already submitted our design plans to the Macau government, and pending government approval, we hope to begin development work in the very near future. Point 3, development of integrated resort locations new to Las Vegas Sands. We're committed to identifying and executing our new development opportunities in Asia. We have teams working everyday in these locations to position us strong in Japan, Korea and Vietnam. Traveling behind a little bit is Taiwan, which would take a much longer time and we still don't have target out of those sites. We also have been investigating opportunity sets around the globe including in Europe, North America and South America. During this quarter, we advise the government of Madrid that we have selected the city of Madrid as our Euro Vegas development location as opposed to choosing Barcelona. As I have said on numerous occasions before, we will only pursue projects with returns in excess of 20%. As the company's largest shareholder, our divested interest and government has only the highest value projects that would maximize shareholder returns. Point 4, return of capital to shareholders through growing annual dividends. It gives me great pleasure to announce that the Board of Directors has approved an increase of our recurring quarterly dividend for 2013 by 40% to $0.35 per share per quarter or $1.40 per year. Let me add that we have every intention of increasing the dividend in the years ahead as our business and cash flows continue to grow. I can only say one thing about that, go dividends. Lastly, I wanted to point out an asset [indiscernible] with great value with people in the community may not have been focusing on all the time, our retail mall business. We generated over $100 million in revenue with 84% margin in this quarter alone. That's a 16.9% increase, 16.9% increase over the result of a year ago. We believe that our retail assets are among the most valuable in the world and that cap rates for similar assets in Asia could be easily approached with 29%, million [ph] at value, and that's not including additional retail we're going to put in Lot 3, a mall retail that we put in, in Cotai Central, and as I said in my previous call, that we're imposing the government to turn the [indiscernible] into the [indiscernible] value mall of -- our designs indicate potential of $800,000. So that's a trigger we could pull at any time to fill our confidence and an important part of the fundamental business strategy. With these proceeds, we could easily work out all of our debt easily, without [indiscernible] retail than what we have today.

In closing, our financial stand and cash flow are evident in our results. As we have said in the past, our cash flows and balance sheet strength will allow us to both increase our return of cash to shareholders and retain ample liquidity to invest in future growth opportunities, both in our current markets and in other emerging jurisdictions around the globe. With our strategic positioning and a strongly experienced leadership team we have in place to execute our strategy, I couldn't be more optimistic about the future. I hope I've made my point without dis-servicing our 4 components of future growth, but let me be crystal clear. We will always be a growth company. So, Mike -- let me turn the call over to Mike [indiscernible].

Michael Alan Leven

Thank you, Sheldon. In the interest of time, I'll take a few minutes to add some specific additional color on our developments, the situation in Singapore, Las Vegas and Bethlehem markets. Rob will cover Macau and Ken will cover the earnings and balance sheet. Let's talk about a little more details about development strategies and where we are as we continue to fill the pipeline with promising development opportunities around the globe. The Parisian Macau, the structure has been submitted to the Macau government. The designs are practically finished and we're ready to go, just awaiting government approval. As soon as government approval comes, we will put tiles on the ground and begin the construction period, which should last a little bit more than 30 months, and hope to be opened in that property by the end of '15. We will also reveal to the public, all the designs and the plans when government approval comes. In Asia, outside of Macau, in Japan, we are awaiting legislation, which is supposed to be submitted in April to the Diet. After that, there will be an approval process for a year or maybe 2 as it goes through the Japanese procedures. We are looking at sites in both Osaka and Tokyo, and we continue our investigations and have people hired on the ground, working on our behalf. In Korea, we have met with government officials at the federal government level, as well as the city levels in Seoul and in Busan, Korea where we're interested in attractive sites for our business. I want to emphasize in Korea that we have not negotiated tax rates, that it's also a must that we have some kind of local play available to us in order to pursue our Korean activities, and that we expect to have a situation where we have presented a single prototype of restriction on local play so that we can, in fact, get into the Korean market. In Vietnam, we have looked at numerous sites in Vietnam, we continue to work with the government there. Our eyes are on Ho Chi Minh City and Hanoi. Progress is being made, however, there's a longer way to go there at the present time and in the other areas. We've also been on the ground in Taiwan. We are not interested in the islands offshore, we are interested in the mainland in Taiwan. We haven't made much progress there, but there is some interest going forward. In Europe, our operation in Madrid for the Euro Vegas Strip continues. We continue to meet with the government. There continues to be activity in the area of grants or incentives, in the areas of the tender, the land acquisition, as well as the financing. We are expected by the government to present our plans in some detail in early January, and at that time, we will also have more information of what the legislation is that will be passed in our favor. In North America, we are working with the Ontario Gaming Commission as far as a potential downtown site in Toronto. We have decided on the location. There are lots of things in the way at this point, including the approval of the Toronto City Council. We don't know where that project is going to go at the moment, but we're ready to pursue it as soon as the project is released and our conditions are met. As Sheldon mentioned, the return on investment is critical, particularly in the North American locations. At the present time, there's lots of talk in New York, particularly in Queens, a lot of go-see, and I have had numerous meetings in that market already and we are continuing this week -- sorry, next week to go back to see if that -- we can pursue an opportunity in that particular area, once again, subject to tax rates, subject to all of the other conditions that would make our products successful. In South America, we have had people on the ground in Brazil, both São Paulo and Rio de Janeiro, looking at opportunities there. And we are, that side, at initial investigations in Argentina. So we're very busy. We have the full development of property working in these areas, and we expect to fill them in the next year or 2. Many of these situations will come to fruition, either fit our model or will not. And once again, I should emphasize, as Sheldon said, if it doesn't meet with any of these that don't meet our return hurdles, we certainly will not pursue it.

Let me turn to Singapore for a moment. After unusually rapid ramp-up period, our VIP volumes and mass table business have now been stable for all of the last 4 quarters. VIP volumes had been between $11 billion at the low and $13 billion at the high in the roll in each of the last 4 quarters. Mass table revenue has also been steady at between $260 million and $280 million over the last 5 quarters. Slot revenue has decreased by 8% this quarter compared to the same quarter last year because of a decrease in local play. This concerns us and we are putting strategies in place, you'll hear some of this from Rob, in terms of how we can replace that business with additional business that we're after. Our hotel room and MICE business have performed exceptionally and are operating at near capacity. There's rarely an empty room in the Marina Bay Sands these days. Retail has also grown meaningfully and we are in the process of developing additional dining and entertainment offerings in our mall. Looking ahead, our greatest opportunity for growth lies in attracting new premium mass and VIP customers from outside Singapore. These visitors from around the region, including from Indonesia, Malaysia, Thailand, Mainland China, Hong Kong, as well as Japan and Korea, will provide the growth.

In Las Vegas, our business has been stable. We held very well this quarter and the bright spot in Las Vegas continues to be strong growth in play from Asian visitors to Las Vegas. And we have the air capacity to continue that business. We have some group cancellations since last quarter, but the volume of group bookings for 2013 looks quite a bit stronger. Sands Bethlehem, a single comment there, continues to grow effectively and we're quite pleased with Sands Bethlehem. As a matter of fact, during the recent storms, Sands Bethlehem's electronic capability was still on board because of the generators that we had in place, and we actually sold out in the hotel to last 4 nights and one of the few places in Bethlehem that had power.

Before I turn it over to Ken, I want to give a special thanks to Ed Tracy and his team at Sands China. In the last few months, we have opened 4,000 rooms, 3 hotels, 2 casinos, numerous food and beverage and retail facilities and meeting facilities in a situation where employment is full. Macau runs a 2% employment rate and I want to commend those people for the great job they've done in getting us to date. Plenty of growth to come, but the openings have been superb. With that, I'd like to turn it over to Ken to take you through some of the financial situations, and look forward to your questions.

Kenneth J. Kay

Thanks, Mike. Revenue expanded 12.5% despite low hold in Singapore. Hold adjusted property EBITDA was $950.7 million, down a little less than 1% compared to the quarter last year. Our strong growth in Macau was offset by a smaller contribution from the VIP business in Singapore compared to last year. Our hold adjusted EBITDA margin of 34% remains healthy and reflects our higher market share in Macau of lower margin VIP business. We expect hold adjusted EBITDA margin to expand as our mix of mass and non-gaming revenues in Macau grows with the ramp-up of Sands Cotai Central. Hold adjusted diluted earnings per share was $0.53, down $0.06 from last year's third quarter. The decrease in earnings per share was driven by increased depreciation and amortization expense related to the opening of Sands Cotai Central, higher minority interest and increased share count. Lower EBITDA had a $0.01 unfavorable impact, but was entirely offset by the favorable impact of lower interest expense, gaming taxes and other items. Our cash balance at September 30 was $3.75 billion. Our trailing 12-month EBITDA was also $3.75 billion. And our net debt is approximately $5.7 billion. Our debt outstanding is both long-dated and cost-effective, with only approximately $100 million coming due in the remainder of 2012 and 2013, and at an average borrowing rate of approximately 2.9% this quarter. Our net debt to EBITDA on a consolidated basis is approximately 1.5x. This is a very comfortable position for us and supports the decision to increase our recurring dividend by 40% for 2013, while retaining ample resources and liquidity to pursue future growth opportunities. Looking ahead, we would be very comfortable with a net leverage ratio of up to 3x to 3.5x if we were fortunate enough to have several integrated resort projects and developments simultaneously. As those projects come online and begin to generate cash flow, the ratio would naturally decrease. So again, our strong balance sheet gives us tremendous financial flexibility. We maintain the flexibility to utilize additional strategies to enhance shareholder returns in the future. The board focused principally on increasing the recurring dividend at the last meeting. Share buybacks and special dividends will continue to be on the potential list of future alternatives, but will be weighed against the requirements for future investments in growth.

And with that, I'll turn the call over to Rob.

Robert G. Goldstein

Thanks, Ken. In Macau, we're generating exceptional growth momentum in every gaming segment, mass table, slot, ETGs, as well as VIP. We're earning $8,700 per table per day versus $6,900 in last year's numbers in the mass table segment. The additional hotel inventory of 1,800 Sheraton rooms came online in September and an additional 2,000 rooms will come on board for next year, and they should boost our growth as well. Slot and ETG volume is up 29.4% this quarter, rolling volumes are up 45.5%, while total VIP market in Macau was flat. Our mass table revenue increased [indiscernible] ETGs increased 48-plus percent in the quarter to reach a record $669 million, and that represents a market share of 26.4%, the most important segment in the Macau market from our perspective. Looking at mass tables, slot and ETG win, together, we're winning $8.5 million a day in the third quarter across our property portfolio, which is up about 35% a year ago. We are the market leader in mass win per day. So looking ahead, we expect the lion share of market share growth to occur in Cotai, where majority of the market's sleeping rooms, shopping, dining, entertainment amenities are located. We should be a primary beneficiary of that growth. The ramp at Sands Cotai Central is visible in our results today. Our mass table win -- our mass win per day increased 15% in this quarter compared to the April to June 30 period. Our rolling volume per day increased over 13% in the September quarter compared to the June quarter. Our hotel occupancy's also strong during the quarter, has continued to ramp during the current fourth quarter.

Operator, may we have the first question, please.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Mark Strawn from Morgan Stanley.

Mark Strawn - Morgan Stanley, Research Division

Rob, you mentioned some initiatives you're undertaking both in Macau and Singapore to reaccelerate same-store growth in those markets. How was -- with same-store growth in Macau flattish and turning negative in Singapore over the last 2 Qs, where do you think that -- those kind of same-store growth rates can go over the next couple of quarters? And what are the real key initiatives you're putting in place that will drive those levels?

Robert G. Goldstein

Yes. I want to start with our strength. Our strength is in Macau. As we look at the portfolio now as opposed to initial properties, the way I view this into the market for us, our portfolio market versus Four Seasons versus Venetian versus Cotai, I think what's happened here is, as you know, the mass revenues are booming there in Macau. I mean, think about $8.5 million a day of 45% margin business, pretty extraordinary. I think we'll continue to accelerate for the simple reason of capacity, hotel sleeping rooms and retail. And once that bridge is completed in December, I think we end up with a 9,000 room hotel in Cotai. I can imagine we're not going to be able to hold up more than continue what we're doing now. It's still the hotel room, it's still the retail and watch the market share increase. I think David Sisk has to be singled out for his other junket segment. We're, as you know, a few short years gone non-competitive in that segment, and now we're very comfortable, we're going with that. But the real story in Macau, as everyone's aware of, is the mass table side and mass -- and ETGs and slots. We're just here to start growing, gaining more share by the quarter and couldn't be more pleased we're heading there. Same-store sales, I rather speak to same portfolio sales. I think it will be double-digit from our perspective on the mass side. Singapore is a different story. As you know, we are flat in the VIP segment the last 4 quarters. We had an exceptionally year-on-year quarter last year. That business is no longer there. VIP is a challenge today versus -- on the growth story because we've seen ourselves softening up. We have increased our events side significantly into starting this quarter. We sure had a very, very strong event last week and again, this week. We're doing more special events to the high end, targeting the rolling customer. The obvious challenge here as you can see from the numbers is on the mass slot and table side. Singapore has been a growth story at 4, 2, was started 2, 3 a day. It went 5 store [ph] 5 a day since we opened. That is the challenge. I think Mike and Sheldon both referenced we have a very different approach there, and that's going to be targeting premium mass customers, not rolling customers, but $10, $20,000 customers from Jakarta, KL, Bangkok, Tokyo, Seoul, et cetera. We're putting a team on the ground and incentives on the ground to try to drive more of that premium mass customer into Singapore, more tourist-driven. And we think it's going to be very successful. We have started out a few months ago. We're looking to put a lot of boots in the ground and our belief is that's the growth in Singapore in the near future.

Mark Strawn - Morgan Stanley, Research Division

That was helpful. One follow-up on Macau. Any update on when you think you'll get the additional tables at Cotai Central? And if and when you get those, you plan to move tables back to the existing properties there?

Robert G. Goldstein

Mike just came back and what we believe is January is the right date for the additional tables on Cotai. What we continue to do, and I think Ed and Dave and that team, was -- every day is examining the highest yield per table, be it Cotai or The Venetian. We have a good problem. We have a lot of business over there and even downtown, even on -- at the old Sands, continues to be some pretty good numbers. So our goal is to maximize yield per table, profitability per table regardless of the hotel it's in. And as you see Cotai ramping up our dilemma, it's a wonderful dilemma, is can we get to $10 million, $11 million, $12 million a day with table ETG win. So our goal is not to identify a property, but whatever -- wherever our table performs best, that's where we'll go.

Operator

Your next question comes from Joe Greff from JPMorgan.

Joseph Greff - JP Morgan Chase & Co, Research Division

Just one follow-up question on Singapore. How much of the declines in Rolling Chip volume in Singapore would you say is intentional or by design just as a proactive way of maybe managing credit risk and being careful, with the exception of credit, versus it being more of a demand-related issue?

Robert G. Goldstein

So unfortunately or fortunate, depending on your perspective, we're not managing it to go down, but we'll try to manage it up. And we just -- the man on the back edge, consumer demand was softer or has been in the $11 billion, $12 billion per quarter rings. I'd love to say it'd go back to $16 billion. Obviously, we're managing our reserve, more aggressively looking at aging of our accounts, but it wasn't by design that the demand was soft. It was by customer demand, a lack thereof. So we'd love to go back to a $15 billion -- our goal is get back to $15 billion, $16 billion all quarters and collect the money as well, but it wasn't -- it was consumer demand.

Joseph Greff - JP Morgan Chase & Co, Research Division

When you look back at the third quarter by month and maybe what you've seen so far in the 4Q, would you say that year-over-year trend, that's negative on a year-over-year basis, that it stabilized or has it bottomed? Are you seeing any degree of improvement or stabilization?

Robert G. Goldstein

It has stayed pretty flat. I mean, if you look at 2Q, 2 of '12, we get $11.5 million, $11.8 million this time. We had an exceptional third quarter '11 at $16.7 million, but unfortunately or fortunately, depends on your perspective, Singapore, it looks like a $45 billion to $50 billion annualized toll market at this time. I mentioned earlier, we want to be much more aggressive on the events side, doing some very strong special events to drive that, but be margin conscious as well. We don't fear the credit side. We just would like to see more demand and the right kinds of customers. So there are bigger challenges, very candidly, is to make sure that premium mass growth returns again. That's the margin 65-plus percent we'd like to get back to, and that's the segment where we focus on as far as we think there's short-term appreciation, I hope.

Sheldon Gary Adelson

This is Sheldon. What I want to say is that the VIP market out of China is reputedly slowing down in Macau but we're not experiencing it. But again, we have a pretty good [indiscernible] in Macau. I think the same thing is happening in Singapore, that the Chinese goes to uncertainty. They don't know what's going to happen when the new government comes in either this month or next month, but before the end of the year. And so their issue of uncertainty will be resolved and people will go back to their normal lives. I for one, having discussed this with the Chinese people and their behavior, everybody says -- the [indiscernible] doctor says the same thing, they lie low where there's uncertainty. And they [indiscernible] when the uncertainty is lifted. All right? And the only uncertainty that people can look at is from their own internal view points in the freer city, how is the new government going to treat them. And once those issues have moved into the more certain column, I think we'll see a lot more of VIP business coming back.

Joseph Greff - JP Morgan Chase & Co, Research Division

Great. Sheldon, the last few conference calls, you spoken more and more about retail mall profit ability, and we've seen some improving trends there. What are your thoughts on, I guess this will relate more to Macau, but what are your current thoughts on monetizing that, whether selling part of it or spinning out part of it via an equity spin? How do you look at monetizing? Because you do look at these very low cap rates and you're probably not getting that equity value currently. And if you were to monetize it, you certainly could demonstrate those low cap rates out there. That's all for me.

Sheldon Gary Adelson

When I look at that Joe, I do. The -- it's a very drooling, enticing and stimulating matter. I mean, I've been saying that our business model is unlike any other business model in any portion of the [indiscernible] retail business, ever. [indiscernible] these non-core assets, we sell and we pay for the entire cost. We've got about $9 billion to $10 billion today, and I'm not going to sell Macau until we finished the bridge, which is next month, in December, and we let it -- that to [ph] cause traffic. It's a unique bridge. It's not like the bridges in Las Vegas, where they're outdoors that are exposed to the weather. This is fully covered, fully enclosed, fully air-conditioned and fully equipped with people movers, moving sidewalks. People [indiscernible] just kind of go up there just for the experience of going on over the bridge on moving sidewalks. So we'll see how that impacts. If that has impacted well, I think we could probably reach another [indiscernible] or maybe more. But we're looking at whether or not we should turn that over now, or we -- I mean, [indiscernible] are monetizing it, or we should wait until we get the approval for the tropical mall, and we put the -- a new retail and luxury [ph]. So we're still in the midst of that in any event. This is a good time, there's a good cap rate. I remember the time there wasn't a good cap rate. And we just haven't -- we haven't focused on that so much, because from my standpoint, I've focused on development and strategy. And so I came out there to do that 800,000 square-foot mall, that will add a couple or a few million [ph] in dollars. So it won't hurt to just keeping development. So all we know is that, that money is out there to be gotten without any interest, so it feels very good that way.

Michael Alan Leven

We also have 26 more stores opening in the Four Seasons, 43 more stores opening at 5 [ph] in Cotai Central, and as Sheldon said, the potential of an 800,000 square-foot 300-store mall next to the Sheraton, on the tropical garden space. So there's a lot more retail to mature for us to essentially maximize that retail facility. And that the 26 [ph] new stores in The Venetian -- or in the Four Seasons will open in November of this year, actually next month.

Operator

Your next question comes from Shaun Kelley from Bank of America.

Shaun C. Kelley - BofA Merrill Lynch, Research Division

I just wanted to ask a little bit more about the ramp up at Cotai Central. It looks like obviously from the market share statistics, that some of us see that the debut so far since September 20th has been -- looks like it's starting to be a little bit more successful. Rob, could you give us a little bit of your thoughts in terms of how you guys are beginning to utilize some of the hotel rooms, how you feel about the gaming side, is it mass or is it VIP that you're attracting into phase 2? And then lastly, what you think about margins at that property? Because they were down a little bit sequentially, but I imagine they can be a lot higher over time.

Robert G. Goldstein

I guess, from the way I look at the properties, first of all, we're very happy with the junket segment there. I couldn't be happier with what's happening at the junket side. The team there, that segment is very, very well. And we -- to be blunt about it, we're surprised at how well it does, so quickly out of the box. We have growth opportunity, that's our weakest performer right now on the mass table side, and part of the reason why is The Venetian is so damn strong, and so is, of course, the Four Seasons, although much smaller offering at the tables. But I think our growth potential both from a margin and EBITDA perspective, emanates from the ramp as we use more hotel rooms, the retail gets opened, as we get up to a $10,000 -- our goal is $10,000 win per unit per day like The Venetian did this quarter. When we get there, you're going to see the Sands Cotai Central, I believe it's the ultimate mass product, built for that market. What they've done there in the junket segment surprised me, how well it's doing. So they get the mass table, went up to $10,000 a day, fill the ETGs pumped up, that's where the growth opportunities are for the Sands Cotai Central to start pushing up against The Venetian in '13 and '14. The margins will move with the mass. To be honest, a 10%, 11% junket segment is still challenging on the margin side. The ETGs in that building along with the slots, it had a slow start. It's all coming together as we get the mass -- the premium mass side cranking, and we get all the rooms opened in early first quarter of next year and that bridge gets complete, I don't think there's any reason to doubt that this property should be a $1 billion property down the road. I feel wildly confident. It's a great property for the market in Macau today, lots of sleeping rooms, lots of retail, lots of food, a great gaming floor. I feel, we always felt confident that Sands Cotai Central will rival Venetian once it's fully operational.

Shaun C. Kelley - BofA Merrill Lynch, Research Division

That's really helpful, Rob. And then I guess secondarily, I just like to ask a little bit about the dividend announcement. So we've obviously gotten very good feedback, and it looks like depending upon where the stock is, it will be right around a 3% yield. Ken, could you talk a little bit about just what you'd be comfortable with in terms of the payout ratio over time and just any additional color on how much we can think about potentially increasing that with possible double-digit percentage increases beyond the table in the future, that will be helpful for investors.

Kenneth J. Kay

A little bit of a loaded question there, I appreciate that. So I think what I can tell you is when we went through the deliberations on the dividend, we were really trying to focus in on kind of rightsizing the dividend and getting it to around a 3% yield, which is what you articulated. And that's really where the lion's share of the discussion is focusing on. I think, depending on what conditions are going forward, our focus is obviously on increasing that over time. As far as what the percentage of the increase is, it really is a function of what we feel is the rightsized dividend at that point in time when that decision is made. But that's the way we look at it, more so than really on a payout ratio because we've also got to take into account kind of what the horizon looks like in investments and future growth. And so we have to factor that in to make sure we're in a balanced situation. But for right now, the right size of the dividend we felt was at 3%, and that's where we generated the increase of 40% to get to.

Operator

Your next question comes from Felicia Hendrix of Barclays.

Felicia R. Hendrix - Barclays Capital, Research Division

Rob, you guys have given us a lot of detail, and we really appreciate that. And clearly, the quarter was affected by hold, and even adjusting for that and the provision in Singapore, you did come in a little bit below our property EBITDA forecast. So I'm just wondering on a hold-adjusted basis, were there any properties -- you talked about Sands Cotai, what's going on there, but were there any other properties where you might have expected to see better flow-through?

Robert G. Goldstein

[indiscernible] not in Singapore, but in Macau?

Felicia R. Hendrix - Barclays Capital, Research Division

Well, just -- no, in general.

Robert G. Goldstein

Obviously, I mean the Sands Cotai numbers are good but they can be better. Again, the margins are hurting a bit due to the premium mass or lack of premium mass, but I think The Venetian did very, very well. The Four Seasons, it's a junket-driven property, so it's always got that challenge. But I think the Sands' downtown was great. Obviously, the larger reserve in MBS hurt us, but that's just reconciling [ph] some of the accounts. But now overall, I think it's all there to see. We've laid it all out for you, so I can't add much color to that.

Felicia R. Hendrix - Barclays Capital, Research Division

Okay. And then actually, just a question on something else. What was the percentage of direct play at Four Seasons in the quarter versus last year at this time, in the third quarter?

Robert G. Goldstein

Direct play being defined as direct junket play or, I mean, as our direct business?

Felicia R. Hendrix - Barclays Capital, Research Division

Your direct business.

Robert G. Goldstein

Let's take a look here. We would -- let's see. We were down a bit. We were growing volume this quarter of 1.461 versus 1.507. We held light, 2.69 versus last year's -- excuse me, I'm looking at Q2. So Q3 '11, we were 1.570 versus 1.461 on the Rolling volume. We held 4.39 last year versus 2.6...

Sheldon Gary Adelson

She's looking for the difference between the junket business and the premium direct business.

Robert G. Goldstein

Is that right? I'm trying to give you premium direct, or the junket?

Felicia R. Hendrix - Barclays Capital, Research Division

Yes. What percentage of your overall VIP play was your direct-generated play.

Robert G. Goldstein

The overall business, it's mostly 7.5 Rolling on the VIP junket versus 1.461 on direct. So a lion share obviously, the VIP market.

Sheldon Gary Adelson

At the present. It's much higher at The Venetian.

Felicia R. Hendrix - Barclays Capital, Research Division

I was just asking at the Four Seasons.

Robert G. Goldstein

Yes. It's 7.5 versus 1.4, and we held last -- the hold is obviously in 3Q '11 we held 2 versus 2.56 this year.

Kenneth J. Kay

It was about 16% in terms of the premium direct percentage.

Felicia R. Hendrix - Barclays Capital, Research Division

And Ken, what was it last year?

Robert G. Goldstein

Hold on a second, I'll tell you. 72 million versus -- 72 -- the 152 million for third quarter '11.

Kenneth J. Kay

It was about 37%.

Robert G. Goldstein

Versus 69 million [indiscernible]

Kenneth J. Kay

It was about 37%.

Robert G. Goldstein

Part of the growth there is from the junket segment.

Felicia R. Hendrix - Barclays Capital, Research Division

Correct. Yes. That's correct. I'm just been trying to figure out where the disparity was with our numbers. And then is it -- Sheldon, is it a little too early regarding The Parisian to talk about the incremental number of tables you think you might get there.

Sheldon Gary Adelson

Well, I can only quote what the government has said publicly. I don't want to talk about what they say privately. We've asked for the minimum that we think we need to open a lot trade [indiscernible], the government has said that they -- they've indicated publicly that they will give more tables to the people who are building more non-gaming. They're not going to allow the total space to -- the main idea is to come down to 25% casino and 75% non-gaming. They want it down to 10% or less, which means that the guys who were going to build casino and hotel and a couple of restaurants, they're not going to get very many tables. They only have like 2,000 tables to give out. I don't think it would be surprising for them to say, the guys who will build 25% a mall casino will get the same number of tables with people who build 10% or less. Our business model says that we build -- actually we have the largest casino in the world, the Venetian Macau, but it's only 4.5% of the total amount of space. And all of our plans for all of the lots on the Cotai Strip would amounted to, if ever we build a mall, 2.5% of the total. So we're setting the precedent on how they're going to do it. So in our case, I'm pretty sure that if the government follows what it said publicly, that we'll get at least the number of tables we ask for. I have since increased that, because publicly, I've increased it to 500 but we can live with 450. Because the other guy is saying, Sands says they only want 600 and NPL says they want 500, but they're not going to build the entertainment, the shopping, the MICE space in particular. And as you know, we focus a lot on MICE space. So they want people that -- they're going to get the tables to the people they say that are contributing more to the nature of business capital objectives.

Operator

Your next question comes from the line of Jon Oh from CLSA.

Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division

Rob, if you could just give us a quick sense of your strategy in Macau in the premium mass market segment. Could you quantify for us how big is your opportunity today, maybe give us a sense of how much of your mass market today would you classify as premium mass market, and maybe give us a roadmap as to how much bigger you think you could be, specifically for Cotai Central?

Robert G. Goldstein

I think, let's be honest.

Sheldon Gary Adelson

We're building [ph] this to make money.

Robert G. Goldstein

Yes. That's a simple one. The way we view this is we're in a different place than anybody else because we have 3 distinct segments. We've got super premium, which tables winning $20,000 plus a day, probably that's less than 5% portfolio; 15% will probably be devoted to, I'll call, premium mass; and the lion's share, the bulk, would be in the pure mass business. But we're in a unique place. To be frank, we've got more capacity than anybody else by a lot. We've got more sleeping rooms, more retail, more food. So the way I view this is it's probably the single greatest opportunity I've ever seen in any market anywhere. I can see a day when if we're able to do it at 8.5, how big they get depends on obviously -- we're going to grow faster than anybody because we got big capacity and there's plenty of room to grow. Our buildings are built for mass, premium mass, super mass. We're very focused on it. We think we've done a terrific job of upping the junket segment, but our focus and our profit margins obviously reside in this segment. I think one of the unique things in our buildings is that we can talk to the customers not betting just $1,000 on a day, we can talk to them betting less, we can offer them no one else can offer. So we've got a multifaceted strategy at all 3 segments, but our biggest single opportunity obviously is in those tables that we can drop minimums down and get that customer. We think ETGs are very important part of that. How big can it get, Jon? I don't know, I read your reports, and I believe you, we can get very, very big, and I think you're right. I think the growth opportunities are enormous for us because we're in the sweetest part of the market where the margins are 45%, 48%. I don't -- I see a day when we can -- on the ETG slots side, surpass $1 billion, it's not too far down the road. I think mass tables can be staggering, I really do. I mean, the market and the mass tables [indiscernible] as dumbstruck at how well it's done. But the biggest beneficiary is this company, and that's where our focus is. And how big can it be, I don't know. I like to believe that you are right, that we can grow double-digit for the foreseeable next 2 years, and we're the biggest beneficiary. That's our biggest opportunity by far.

Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division

Do you currently have any space allocated within Cotai Central for you to allocate specifically for premium mass, or is that just jumbled within the whole overall mass floor?

Robert G. Goldstein

No, we have -- we're reallocating space now, Jon, up on the top floor, as well as rethinking the floor, Ed and David are at the very depth of the strategy, rethink Cotai and Sands Cotai with additional new rooms and spaces. We are rethinking as we speak. Because that's where the opportunity for Cotai $1 billion property resides.

Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division

All right. And just last one for me, for Ken, I guess...

Robert G. Goldstein

Jon, hang on. Sheldon wants to make a comment.

Sheldon Gary Adelson

It's a very big space that we want to reallocate [indiscernible]. We got plenty of room, I think it's 70,000.

Robert G. Goldstein

Theater box type. Sheldon is referencing a theater box type in Sands Cotai Central. It's over 80,000...

Sheldon Gary Adelson

We have the same box in what was [indiscernible], which is now the Sheraton. We could turn that into mass gaming, mass premium.

Robert G. Goldstein

We're rethinking the floor, Jon, every which way we can including the 39th [ph] floor of the current building, including Sheldon referenced a theater space. We have, yes, a big opportunity, and we recognize there's got to be a right physical space to make it really sing to $10,000, $15,000 per table per day. And I do think where the bridge is connecting 9,000 keys, all that retail, I don't think $10,000 a day across the portfolio is that ambitious, I think it's very achievable for us.

Sheldon Gary Adelson

Well, one marketing move [indiscernible] is pro-rata. The situation is fluid, it's dynamic. We'll try out new things, what used to be our limit is now our limit, diamond, ruby and [indiscernible] particularly in mass.

Robert G. Goldstein

If you look at our space in The Venetian, that's -- what Sheldon is referencing, that premium, that mass play in The Venetian, ruby, diamond has been exemplary from the day we opened it. It's an extraordinary success story. Look at The Venetian doing $10,000-plus per table per day currently, where does it go, I don't know. It could be $11,000, $12,000 a day.

Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division

Okay, great. A question for Ken, the $1.40 of dividends from LVS, that's a 40% increase in pay out, but you have not really made any commitments with -- on the Sands China dividends of 58% Hong Kong for every 6 months. How should we go about thinking about that, how are you sourcing that incremental $0.40 per share pay out? Are you taking that from Singapore, and if you are, could you help us think about how should we model the tax implications of that?

Kenneth J. Kay

Yes, sure. A couple of questions in there. The Sands China board will need to make a determination as far as what the dividend will be coming out of them for 2013, and that decision hasn't been made yet. But I think if you just look at it from a cash flow standpoint, I think the way that -- I'm kind of thinking about funding the LVS dividend, which is about $1.2 million, a little bit less -- I'm sorry, $1.2 billion. So it's probably close to about $1 billion coming out of Sands China Limited, and that would be net, right, of the minority interest fees that would get paid out. So that $1 billion would be flowing out approximately from them. And then the balance would be sourced from either cash from Marina Bay Sands or cash that we have either in the U.S. group or at the parent level. So that's kind of the way we were thinking about it, although no final determination has been made relative to that. And then it's all, really, any money that we bring up from Sands China Limited or from Marina Bay Sands is very tax efficient because we would be offsetting any taxes that would be owed on the repatriation of dividends with foreign tax credits that are generated in our Asian activities. And so for all intents and purposes, that money comes out on a tax-free basis.

Sheldon Gary Adelson

Jon, this is Sheldon. Obviously, we're going to have to get some money out of SCL, and we've got to share it proportionately. And so we've got -- to the extent that we have opportunity to make a lot of money, we just got the okay from the board day before yesterday. So we haven't talked with the SCL board, but obviously we're going to have to share the good fortune. And by the way, we're happy about that. We get 70.3% of that.

Operator

Your next question comes from the line of Steven Kent from Goldman Sachs.

Steven E. Kent - Goldman Sachs Group Inc., Research Division

Could you just discuss the new development opportunities? Maybe Mike, you could speak to what you're envisioning in New York. And then when you talk about the opportunity in Madrid, I guess, I'm intrigued because on your slides, you go through 6 steps that you're looking for, but the bottom one is that you'd need to see some changes in the economic conditions, and that always seems secondary now when I'm looking at the slides versus just a few months ago when that seemed to be more paramount.

Michael Alan Leven

Well, I think, Steve, the economic conditions really during the course of these -- the meetings with the Spanish government and the course of our meetings here, if something were to deteriorate significantly in terms of the euro or what have you, that's just a caveat that we're watching that. This is a process that will go on for a number of months as we go through the process of legislation's final site selection, the tender, land acquisition, et cetera. But if something turns dramatically negative in the short term, that simply something that we would look at. We want everybody to know that we'll be making a judgment on that basis. So I think that's on the chart just to keep aware that something could happen. We feel good about looking at the investment at the present time and looking at the future. And basically if all things come in order, they could all come in order, but if something dramatic happens in the economic environment that causes real concern, we just -- we will very much hesitate to go forward.

Shaun C. Kelley - BofA Merrill Lynch, Research Division

But if Spain stays the way it is right now, then you would go forward from an economic perspective?

Michael Alan Leven

I think if everything else worked according to our plan, yes.

Sheldon Gary Adelson

You have to understand that one of the biggest triggers in the entire matrix is the fact that to build sensitivity analysis -- I don't want to say this publicly, but our gaming tax rate, $1 million over there is going to be significantly lower. So if we can make significant adjustments, they end up with our EBITDA percentage by the tax rate. We make a 33% EBITDA rate in Macau with a tax rate at 40% . We make 50% to 55% EBITDA of revenue in Singapore with a much lower -- with a tax rate averaging about 15%. We get below that, which I'm confident we will significantly, and we have certain means to achieve that, to get below that, then we know [indiscernible] much money and by any measure [indiscernible] day about the tables or slots. So we might end up with the same amount of money with only 70% of the amount of business that it would take to do that out of our other locations. So you can't compare apples-to-apples, they're 2 different calculations.

Steven E. Kent - Goldman Sachs Group Inc., Research Division

Okay. And then the commentary on New York?

Michael Alan Leven

In New York, basically we have been having some conversations of our Willard's Point [ph] in Queens. We previously have looked at Manhattan. Most of the noise we get in Manhattan is that it won't happen. We think there's a potential -- there's been some press about Willard's Point [ph]. We've looked at it, continue to look at it, we're testing that market and talking to the owners of that situation about that kind of development. And once again, that would very much depend upon what kind of arrangements we could make there, as well as what the tax rate would be. And there's lots of rumors and lots of trends flying around, but we think that's a viable market, and we're under investigation there now.

Operator

And your last question comes from Carlo Santarelli from Deutsche Bank.

Carlo Santarelli - Deutsche Bank AG, Research Division

The question was for Rob. You talked a little bit earlier about your mass basis, your premium versus your regular mass, and obviously, the 45% margins in your regular mass business. Could you guys maybe quantify a little bit the differences between the margins of that premium mass customer and that regular mass customer to the extent that there are any in Singapore and Macau?

Robert G. Goldstein

I think in Macau, it's not that material, Carlo. If you think about it, it brings out 44 -- up to the high 40s. I don't think there's a lot of difference. We're not -- it's grocery, it's complimentary, it's room comps, it's meals, but the spread is not great, it really isn't. Singapore, I'd say the same. It's base is pretty consistent, high 60s. Slot, ETG, mass table, the margins grow up. You'll see the win per table in both markets, and the win per table is in that $20,000 per table out of The Venetian in some periods, it may ramp up. But frankly, it's not a whole lot of spread that I can tell.

Carlo Santarelli - Deutsche Bank AG, Research Division

Great. And then if I could just ask a follow-up, were there any changes in your provisions this quarter that hampered specifically the Singapore results at all?

Robert G. Goldstein

I'm sorry, I missed the first part.

Carlo Santarelli - Deutsche Bank AG, Research Division

Any changes in your provisions in this period.

Michael Alan Leven

Yes. Quarter-over-quarter, so third quarter 2012 versus third quarter 2011, there was about a $15 million increase in receivable provision.

Operator

This concludes today's conference call. You may now disconnect.

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