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The retail operations for the Sands China Cotai operations have struggled. Jacobs says he sees improvement over the past six months. “Last year was a bad year globally for retail,”

he says. “We’re not an exception. If you look at our numbers from September, month over month, the gains we’ve had have been quite sig- nificant. If you look in the Hong Kong market, you can see that the retail now in 2010 is largely back. They’re now back in the range of 4.5, 5 cap rates, which, if you’d asked me a year ago, I would’ve said would have been a 2012 event, not a 2010 event.” But even with recovering retail, the new

hotels scheduled to open in 2011 will add around 800,000 additional square feet to the more than 1 million square feet in the Venetian and Four Seasons. Jacobs says he expects that shoppers will migrate back and forth and that Macau has an advantage at least equal to Hong Kong when it comes to shoppers. “One: We don’t have a luxury tax, which is

one of the huge benefits that Hong Kong has,” he says. “Two: It is quite likely this year that we will surpass Hong Kong in total visitors. Three: If you look at the socioeconomic demographics of the people going into Hong Kong versus Macau, there are much larger wallets and a much higher caliber of potential shopper coming in. To get the shopping to really take off in the luxury retail even more so than it is today—and it is quite strong in 2010; the first quarter has been quite good—you’ve got to get them to stay and you’ve got to get more families to come in. Every time we get a family to stay, we actually get a much higher share of wallet and retail than when just the gamer comes in alone.” Last year, LV Sands sought to sell the shop-

ping areas on Cotai and went as far as soliciting bids. None were acceptable, says Jacobs. “We got qualified offers—all cash offers,” he

points out. “The cap rates weren’t what we want- ed. They were in the 7.5-8 range. Realistically, for that quality of an asset, you should be in the 4.5, 5, 6 range. The asset’s only going to go one direction, and that’s up. Our sales per square foot continue to improve, as we continue to grow month over month. I wouldn’t expect any- thing on that in 2010, but I would expect man- agement to be aware of the impact, because it’s multibillion-dollar monetization of that when you sell it.”


Another differentiator for the properties of the Cotai Strip has been entertainment. Jacobs says • May 2010 29

it’s a key element of the company’s strategy. “The Cotai Arena (at the Venetian) is firing on all cylinders,” he says. “We now have three to four

shows a month. The last time I looked, we were about No. 70 in the world in terms of entertainment venues. We’re the only ones listed in the top 100 in all of Asia. That will only continue to grow as we get more rooms for people who come from afar.” Leven says he’s happy with the turnaround in Macau, despite the difficult market. “I’m very pleased with the direction Macau is going in,” he says. “Our stock price reflects a lot of

Macau’s strength. Macau is always going to be a challenge—working in the local marketplace, work- ing with the government, trying to figure out what the future’s like, trying to deal with things that aren’t in writing yet. But overall, there is more good news than bad these days coming out of Macau.” Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56
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