Sands Macao
Venetian Las Vegas Venetian Macao
Palazzo Las Vegas Marina Bay Sands - Singapore
LasLas VegasVegas SandsSands Corp.Corp. CLSA Investor’s Forum 2006 September 14, 2006 ForwardForward--LookingLooking StatementsStatements
Statements in this presentation that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements about our business outlook, assessment of market conditions, strategies, future plans, future sales, price assumptions for offerings at our facilities, capital spending and tax rates. These forward-looking statements are not guarantees of future performance. They are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The risks and uncertainties relating to the forward-looking statements in this presentation include those described under the caption “Risk Factors” in Las Vegas Sands Corp.’s public filings with the Securities and Exchange Commission.
1 NonNon--GAAPGAAP FinancialFinancial MeasuresMeasures
This presentation includes non-GAAP financial measures as defined in the Securities and Exchange Commission’s Regulation G. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available on our website at www.lasvegassands.com in the earnings releases for the applicable periods.
2 LasLas VegasVegas SandsSands Corp.Corp. Business Strategy
Recognize Opportunity Monetize Non-Core Assets Unique Business IndustryIndustry’’ss Model HighestHighest Build at “China Cost” ReturnsReturns
Unique Capabilities Move Quickly
3 LasLas VegasVegas SandsSands Corp.Corp. Business Strategy
Large, Visible Growth Pipeline
⎯ Real estate monetization
⎯ Successful execution feeds development pipeline
Low-Risk Opportunity to Play Asia Growth
⎯ Apply lessons learned from Las Vegas to Asia
⎯ Proven product, Meetings and Trade Show Value, Real Estate Value
⎯ Poised to seize market leadership – Macao, Singapore
4 I.I. LasLas VegasVegas OperationsOperations LasLas VegasVegas OperationsOperations1 Convention Based Model Drives Superior Performance
EBITDAR
$350 $337 $324
$301 $300
$250 $235
$202 $200
$150
$100 2002 2003² 2004 2005 LTM 6/30/06
(1) Includes Venetian Las Vegas and SECC. All periods pro forma for the sale of the Grand Canal Shoppes in May 2004. (2) Venezia Tower opened June 2003. 6 VenetianVenetian CasinoCasino ResortResort Highest Return Property on Las Vegas Strip
Property EBITDA(R) Returns – 2005
35% 33%
30%
25%
20% 19% 18% 17%
15%
10% 10% Venetian¹ Mandalay Bay Bellagio MGM Grand Wynn²
Source: Company press releases and public filings; estimates for invested capital based on Wall Street estimates. Chart shows properties generating over $200 million in 2005 Run-rate EBITDA(R). (1) Venetian’s invested capital base net of after-tax mall sale proceeds of approx. $660 million. (2) Wynn return based on property EBITDA run-rate as of 12/31/05. 7 TheThe PalazzoPalazzo CasinoCasino ResortResort The Next Phase
World-class luxury destination casino- resort
⎯ Fully integrated with the Venetian and Sands Expo and Convention Center
⎯ Opening Third Quarter 2007
3,025-suite, 50-floor hotel tower
Amenities include spa facility, theater, and restaurants
Two casino brands from the front, operating efficiencies of one mega-resort
400,000 sq ft mall connected to Grand Canal Shoppes (pre-sold to General Growth) 8 TheThe Venetian,Venetian, SandsSands Expo,Expo, andand PalazzoPalazzo Largest Integrated Casino-Resort-Convention Complex in World
7,000+ suites Fully-Integrated Facilities 2.25mm SF of meeting and
convention space ne La al ov 840,000 SF of retail K
30+ restaurants
Unique operating strategy SECC
e ⎯ Critical mass u en v A s ⎯ All-suite rooms d ⎯ All-suite rooms n a S ⎯ Convention demand midweek
⎯ Malls as tourist attractions Palazzo Venetian ⎯ Dining as differentiator
$40 - $60 M of operating efficiencies Las Vegas Boulevard Real estate monetization 9 LasLas VegasVegas RealReal EstateEstate ValueValue Real Estate Monetization – Phase II Mall
($MM)
Budgeted Cost to LVS1 $295 $295 $295
Projected Net Operating Income 40 50 60
Sale Proceeds2 658 783 908
Implied Cap Rate3 6.1% 6.4% 6.6%
(1) Currently projected cost, actual cost could vary. (2) The purchase price that GGP has agreed to pay for the Phase II mall is the greater of $250.0 million and the mall's net operating income divided by a capitalization rate. (3) The capitalization rate is 6% for every dollar of net operating income up to and including $38.0 million and 8% for every dollar of net operating income above $38.0 million. 10 SandsSands MacaoMacao CasinoCasino First of Its Kind in Asia / Unique Business Model
Mass Market ⎯ Podium Expansion Completed Aug 23, 2006 > 229,000 SF of Gaming Facilities 665 Mass Market Gaming Tables 1,254 Slots ⎯ 2 High-capacity Asian Cuisine Restaurants High-End Market ⎯ Paiza Club and VIP Rooms for Premium Customers ⎯ 75 tables
Strong and Growing EBITDAR
⎯ $413mm LTM 6/30/06
In Design for Subsequent Addition of a Hotel Tower
11 SandsSands MacaoMacao OperatingOperating PerformancePerformance Non-Rolling Chip Drop1
Non-Rolling Chip Drop versus Macau Mass Table Supply
Market Table Capacity up $1,300 1,497 1,500 37% over last two quarters 1,400 $1,200
1,285 1,300 $1,100 1,200 $1,000 1,100 1,089 Tables²
$900 1,006 1,000 $MM 940 959 900 $800 $1,054 826 $1,021 $1,039 $1,044 800 $700 $927 $932 $882 $855 700 $600 592 600
$500 500 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 (1) Defined as table drop from mass-market and cash play at VIP tables. (2) Macao Gaming Inspection and Coordination Bureau. 12 SandsSands MacaoMacao OperatingOperating PerformancePerformance High-End Volume
Rolling Chip Volume ($MM)
$4,260 $3,936 $4,000 $3,696
$3,198 $3,200
$2,400 $1,993 $MM
$1,600
$856 $800 $419 $55 $0 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06
13 SandsSands MacaoMacao OperatingOperating PerformancePerformance Slot Volume
Slot Handle ($MM)
$275 $263 $247 $250
$224 $225
$200 $190 $MM $175 $167
$150 $139 $129 $125 $110
$100 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06
14 SandsSands MacaoMacao OperatingOperating PerformancePerformance Strong ROIC
Superior ROIC Adjusted Property EBITDAR $117 $120 ⎯ $270 million initial $110 $103 $103 investment $100 $90 $90 $81 ⎯ LTM ROIC 142% $80 $69 $67 $68 $70 ⎯ First-Mover $60 $MM Advantage $50 $40 ⎯ Since opening in May $30 $23 of 2004, the Sands $20 has generated more $10 than $700 million in $0 EBITDAR 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06
15 TomorrowTomorrow’’ss MacaoMacao Learning from Las Vegas – Unique Business Model
Convention and tradeshow market (only better)
⎯ More conventioneers, higher growth
⎯ Export economy (Pan Pearl River Delta)
⎯ Make the buyer want to come…the sellers will be there
Residents of the region love to:
⎯ Travel
⎯ Shop
⎯ Own real estate
⎯ Gamble
Duplicate the world’s most successful resort and convention destination…Las Vegas – But in Asia 16 TomorrowTomorrow’’ss MacaoMacao Transition to a World-Class Casino Resort Destination
Cotai Strip Phase I1
⎯ 7 resort hotels
⎯ 20,000 guest rooms
⎯ Over 1.0 mm SF of casino space
⎯ Over 2.0 mm SF of meeting / convention space
⎯ 3.0 mm SF of retail space
⎯ Over 2.0 mm SF of vacation suites
⎯ 25,000 seats of live entertainment
(1) Proposed. 17 TomorrowTomorrow’’ss MacaoMacao Venetian Macao: Anchor Property of The Cotai StripTM
3,000 suites
1.2mm SF of convention and meeting space
1.0mm SF Grand Canal Shoppes
546,000 SF casino with 750 tables and 4,000 slots
22 restaurants
1,800-seat showroom
15,000-seat stadium Outdoor recreation areas and numerous other amenities 18 TomorrowTomorrow’’ss MacaoMacao Site 2 – Four Seasons1
400 rooms
750,000 SF of vacation suites
31,500 SF of meeting space
221,000 SF of retail shops
45,000 SF casino
Restaurants
Outdoor recreation areas and numerous other amenities
(1) Company has a non-binding agreement with Four Seasons for a management contract. 19 TomorrowTomorrow’’ss MacaoMacao Site 5 (Shangri-La / Traders)1 and Site 6 (Sheraton / St. Regis)2
6,000 rooms3
500,000 SF of serviced apartments
> 1.0mm SF of convention and meeting space
725,000 SF of retail shops
300,000 SF in two casinos
Two 1,800 seat theatres
Restaurants Outdoor recreation areas and numerous other amenities
(1) LVS has signed a binding agreement with Shangri-La (2) LVS currently is negotiating a management contract with Starwood (3) Proposed 20 TheThe FutureFuture MacaoMacao Shifting the “Center of Gravity”
Hengqin Island
⎯ Non-binding endorsement from Mainland government1 New Ferry Terminal ⎯ Long-term development, Airport post-Cotai Airport
Hengqin ⎯ Complements Cotai Island Cotai Strip ⎯ Significant real estate value
Shifting the “Center of Gravity” – Hengqin, New Ferry Terminal, and Airport Expansion All Contribute to Multi Day Stay Environment (1) Subject to Government approvals. 21 ChinaChina Rapid GDP Growth
China’s Gross Domestic Product
$2,000 1,823 $1,800 05) 200 1,654 ugh hro $1,600 R (t AGR % C 1,400 2.7% $1,400 1 1,240 1,160 $1,200 1,080 991 946 $1,000 898 816
US$ Billions $800 700
$600 543 432 $400
$200
$0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: China Statistical Yearbook and Bloomberg.
22 ChinaChina Consistently High Savings Rate
$1.75 trillion in accumulated domestic savings
50.0% 46.0 44.5 43.1 43.1 43.0 43.4 43.2 41.8 41.7 42.3 40.5 40.9 39.0 40.0% 37.938.1 37.7 36.1 35.7 35.0 34.834.5 34.4 34.8 35.3 32.9 33.6
30.0%
20.0%
10.0%
0.0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Sources: China Daily (1/17/06), Enright, Scott & Associates estimates, Comtex News Network, Inc.
23 TomorrowTomorrow’’ss MacaoMacao Increasing Rate of Domestic Travel
Chinese Domestic Tourism
1,400
05) 1,210 h 200 roug 1,200 R (th CAG 1,101 7.9% 1,000 878 870 784 800 744 695 719 629 640 644 (mm) 600 524
400
200
0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: China Statistical Yearbook, China National Tourism Administration.
24 ChinaChina Central Government Support for Development
Increasing Currency Exchange Flexibility
“From May 1, 2006, Mainland Chinese can exchange up to US $20,000 per year, up from US$ 5,000 – 8,000 without declaring purpose, according to State Administration of Foreign Exchange.”
– Deutsche Bank research report (May 8, 2006)
IVS Program Expansion
Six more cities (about 40 million people) added to the program on May 1, 2006
PRC Plan to Help Macao Develop Tourism
Specifically included in the People’s Republic of China’s 11th 5-year plan
Policy of Gradual Currency Appreciation
25 ChinaChina Accelerating Demand for Luxury Goods
“Chinese tourists spend up to US$1,000 per capita on shopping overseas, the highest in the world.”
⎯ ACNielsen and Tax Free World Association (August 9, 2005)
“Demand for luxury goods by Chinese abroad will grow 20% per year through 2008 and 10% until 2015.”
⎯ Goldman Sachs research report (December 20, 2004)
“Overnight tourists from mainlandmainland China to Hong Kong spent approximately 70% of their budgets, or roughly US$2,885, on shopping in Hong Kong in 2004.”
⎯ Hong Kong Tourism Board Yearbook of Statistics, 2004
26 TomorrowTomorrow’’ss MacaoMacao Retail Opportunity
Las Vegas – 2004 Hong Kong – 2004 Base and Percentage Rent per SF Base Rent Alone Per SF
$250 $250 $240
$200 $200 $170
$150 $150 $120 $125 $110 $100 $100
$50 $50
$0 $0 Grand Canal Forum Shops Festival Walk Pacific Place The Landmark Shoppes Atrium
Avg. Annual Base and Percentage Rent Avg. Annual Base Rent Alone
Source: Jones Lang Lasalle and company estimates. 27 TomorrowTomorrow’’ss MacaoMacao Convention / Meeting Opportunity
Convention / Meeting Delegates1 (mm)
75
60.0 60
45
30
15 4.8 6.2 0.4 0 Macao Hong Kong Las Vegas China
(1) China data as of 2003, the latest period for which data is available. Hong Kong data as of 2005; Las Vegas data as of 2005; Macao data is estimated 2005. Source: Hong Kong Exhibition & Convention Industry Association, Business Strategies Group, Asia Pulse, LVCVA, and company estimates. 28 TomorrowTomorrow’’ss MacaoMacao Convention & Exhibition Visitors in Hong Kong
05 20 6 to 04 20 om fro 5 4% +3 4.82 4 3.60 3
Millions 2
1
0 2004 2005
Source: Hong Kong Exhibition and Convention Industry Association. 29 TomorrowTomorrow’’ss MacaoMacao Exhibition Units in Hong Kong from Mainland China
5) 00 2 ugh ro (th R 8,000 GR AG 7,266 C 9% +2 6,000
4,000
2,000 2,000
0 2000 2005
Source: Hong Kong Exhibition and Convention Industry Association. 30 TomorrowTomorrow’’ss MacaoMacao Rooms Opportunity
2005 Occupancy 2005 ADR3
100% $225 $208
90% 86.0% $175 84.0%
$120 80% $125
70% $75 All Hong Kong (1) Hong Kong 5-Star All Hong Kong (1) Hong Kong 5-Star (2) (2)
(1) All Hong Kong hotels. (2) “High Tariff A” Hong Kong hotels (5-star hotels). (3) 7.75 HKD per USD as of May 8, 2006. Source: Hong Kong Tourism Board. 31 TomorrowTomorrow’’ss MacaoMacao Infrastructure: Highway 22 New Super-Highways Totaling 30,000 km
Zengeheng-Dongguan- Heyuan-Meizhou Beijing-Zhuhai Shenzhen Expressway Expressway Expressway Huizhou-Heyuan Shantou-Meizhou Expressway Expressway
Guangzhou-Huizhou Guangshen Expressway Expressway
Pearl River Delta Ring Road
Shensan Expressway Guangzhou-Wuzhou Sanfen Expressway Expressway
Puning-Hunai Guangzhou-Zhuhal Expressway West Line Western Coastal Expressway Dongguan-Huizhou Yuzhan Expressway Line MACAU Shenzhen Yanba Airport Expressway Expressway (Phase III) Shenzhen Western Tongsan (Western Section) Corridor Line Hong Kong – Guangzhou-Zhuhai Zhuhai – Macao East Line Bridge (Northern Section) Legend: Existing Highways Future Highways
Source: Ove Arup Hong Kong Ltd. 32 TomorrowTomorrow’’ss MacaoMacao Infrastructure: Railway New Rail Infrastructure Totaling 10,000 km Beijing – Guangzhou Line Beijing-Guangzhou Beijing - Kowloon Line Line
New Guangzhou Railway Station Meikan Line Sanshui-Maoming Line Guangzhou- Meizhou - Shantou Line Ludding Line Guangzhou - Kowloon Line
Guangzhou- MACAU Guangzhou/ Zhuhai / Shenzhen – HK Line Macao Line Legend: Completion expected in Existing Railways 2007 Future Railways
Source: Ove Arup Hong Kong Ltd. 33 TomorrowTomorrow’’ss MacaoMacao Infrastructure: Air
Potential 50% Increase in Airport Capacity
Guangzhou Capacity 27 million
Shenzhen Zhuhai Capacity (2005) 15 million Capacity (2004) 11 million Potential capacity 25 million
Hong Kong Capacity (2004) 45 million Potential capacity 87 million Macau Capacity 6 million
Total Current Capacity: 104 mm Total Potential Capacity: 156 mm
Source: Ove Arup Hong Kong Ltd. 34 TomorrowTomorrow’’ss MacaoMacao Infrastructure: Proposed Hong Kong Zhuhai Macao Bridge
Hong Kong
HK Int’l Airport Artificial Artificial island island Submerged Lantau Island Zhuhai tube tunnel (‘Gongbei’)
Artificial island (combined checkpoint for HK Macao / Zhuhai / Macao) (‘Pearl’ Reclamation)
Source: Ove Arup Hong Kong Ltd. 35 TomorrowTomorrow’’ss MacaoMacao Pan Pearl River Delta (“PPRD”) Economic Projections
Foreign Direct Investment Exports
$100 $1,200
R GR AG C $80 % R 10 $900 G 1 A C % 15 $60
$600 $BN $BN
$40
$300 $20
$0 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sources: Statistics bureaus of respective Chinese Mainland provinces; Hong Kong SAR, The Census and Statistics Department; Macao SAR, Statistics and Census Service; EIU, ‘Hong Kong Country Forecast,’ August 2005; Enright, Scott & Associates Ltd. 36 TomorrowTomorrow’’ss MacaoMacao PPRD Economic Projections
Per Capita Disposable Income GDP (Urban Households)
$4,000 $2,100
$3,500 R $1,800 R G G A A C C $3,000 8% 1% $1,500 1
$2,500
$1,200 $2,000 $BN $900 $1,500
$600 $1,000
$300 $500
$0 $0 2004 2006 2008 2010 2012 2014 2004 2006 2008 2010 2012 2014
Sources: Statistics bureaus of respective Chinese Mainland provinces; Hong Kong SAR, The Census and Statistics Department; Macao SAR, Statistics and Census Service; Enright, Scott & Associates Ltd. 37 TomorrowTomorrow’’ss MacaoMacao Shenzhen Case Study
1980
Population: 321,000 FDI: $0.3 billion Exports: $0.1 billion GDP: $0.2 billion
Source: Enright, Scott & Associates Ltd., 2005, People’s Daily Online, and Corbis. 38 TomorrowTomorrow’’ss MacaoMacao Shenzhen Case Study
2004
Population: 10 million FDI: $2.4 billion Exports: $77.9 billion GDP: $41.3 billion
Source: Enright, Scott & Associates Ltd., 2005 and St. Petersburg Times. 39 TomorrowTomorrow’’ss MacaoMacao Venetian Macao: Construction Update – July 2005
40 TomorrowTomorrow’’ss MacaoMacao Venetian Macao: Construction Update – September 2006
41 LVSLVS inin AsiaAsia Developing at “China Cost” / Selling at “World Price”
30+ person Hong Kong based purchasing office
Significantly lower labor costs and more expedient
⎯ 3 shifts, 24 hours/day, 7 days/week – significantly faster than US equivalent
⎯ Abundance of highly skilled labor given close proximity to Hong Kong
Better materials costs and availability
⎯ Ready availability of raw materials (e.g., marble, concrete, rebar)
⎯ Lower labor costs of suppliers reflected in purchase prices
⎯ Finished goods costs substantially lower due to skilled Hong Kong workforce and low labor costs
Substantial efficiencies from master plan development 42 TomorrowTomorrow’’ss MacaoMacao Potential Real Estate Value from Malls – Sensitivity Analysis
(US$MM) Cap Rate 5.5% 5.0% 4.5% 4.0% 3.5%
$100 $4,636 $5,100 $5,667 $6,375 $7,286
$115 5,332 5,865 6,517 7,331 8,379
$130 6,027 6,630 7,367 8,288 9,471 Rent per SF Rent per SF $145 6,723 7,395 8,217 9,244 10,564
$160 7,418 8,160 9,067 10,200 11,657
Calculations based on 3.0mm SF of retail space. Rent and Cap Rate assumptions are based on Company estimate