Lim’s Genting Malaysia Bhd bagged for US$236 million (RM713 million) a 13.9-acre tract of waterfront land in northern downtown Miami to be used for a mixed development that would include hotels, restaurants, residences, retail shops and a convention centre. But there’s little doubt that he can to also get a gaming licence there.
Genting group, Wynn Resorts and Adelson’s Las Vegas Sands Corp in 2011 hired a stable of lobbyists to push through a bill that would give them the chance to bid for a licence to operate an exclusive casino resort in any of the five cities in Florida — Miami, Jacksonville, Tallahassee, Tampa and Orlando — where Walt Disney World is located — The land Genting Malaysia bought includes the building which houses The Miami Herald Media Company.
The lobbying began since the Seminole Tribe of Florida won exclusive rights to offer slot machines as well as other casino favourites like black jack and baccarat within tribal areas two years ago. Giants of the casino world have reportedly been lobbying for a chance to set up shop in one of the US’ most popular tourist destinations. The existing revenue-sharing model where the tribe pays the state at least US$150 million a year through 2015 will stop if additional gambling were to be authorised by the state.
To win, lobbyists will need to prove the economic good to the state and its people far exceeds the potential social impact from a possible rise in negative activities associated with gaming. In his 30-page letter vetoing a US$400,000 study on the feasibility of bringing casino resorts to Florida, Governor Rick Scott did say he thought it “important to have a full consideration of the positive economic impact, the costs that may result from this policy, and the impact on current gaming in [the] state” — leaving the door open for the casino lobbyists.
Genting group, Wynn Resorts and Adelson’s Las Vegas Sands Corp in 2011 hired a stable of lobbyists to push through a bill that would give them the chance to bid for a licence to operate an exclusive casino resort in any of the five cities in Florida — Miami, Jacksonville, Tallahassee, Tampa and Orlando — where Walt Disney World is located — The land Genting Malaysia bought includes the building which houses The Miami Herald Media Company.
The lobbying began since the Seminole Tribe of Florida won exclusive rights to offer slot machines as well as other casino favourites like black jack and baccarat within tribal areas two years ago. Giants of the casino world have reportedly been lobbying for a chance to set up shop in one of the US’ most popular tourist destinations. The existing revenue-sharing model where the tribe pays the state at least US$150 million a year through 2015 will stop if additional gambling were to be authorised by the state.
To win, lobbyists will need to prove the economic good to the state and its people far exceeds the potential social impact from a possible rise in negative activities associated with gaming. In his 30-page letter vetoing a US$400,000 study on the feasibility of bringing casino resorts to Florida, Governor Rick Scott did say he thought it “important to have a full consideration of the positive economic impact, the costs that may result from this policy, and the impact on current gaming in [the] state” — leaving the door open for the casino lobbyists.
Even without a casino licence just yet, Genting Malaysia sees the Miami land acquisition as “an integral step” in its pursuit of expanding internationally in the leisure, hospitality and entertainment industry. The envisioned Resorts World Miami represents Genting Malaysia’s second venture in the US, after Resorts World New York at the historic Aqueduct Racetrack in New York City.
However, not everything that the Genting group has touched has turned to gold, though. Its five casinos in London and 38 others in the UK, for instance, have yet to be a big money spinner, though efforts have been underway over 2010 to revamp the operations there.
As Genting group’s cash pile from the Malaysia and Singapore casinos grows, some investors think it should return more cash to shareholders instead of putting money in unrelated pursuits or lofty projects that may take some time to pay off.
As Genting group’s cash pile from the Malaysia and Singapore casinos grows, some investors think it should return more cash to shareholders instead of putting money in unrelated pursuits or lofty projects that may take some time to pay off.
Meanwhile Genting Malaysia Bhd's land acquisition in Miami, Florida for US$236mil is seen as the way to diversify its earnings base and spur growth going forward.
The move was viewed positively given the choice location of the waterfront property as Florida attracted up to 82.3 million visitors in 2010, of which 87% were local visitors.
However the announcement has made no mention of casino operations but the announcement will be in due course as licences would be required from the Miami-Dade County.
It was reported that Genting Malaysia would fund the US$2bil development cost of the project without stating the funding details.
The deal will position Genting Malaysia to capitalise on the potential liberalisation of “resort-style” gaming in Florida. But here was a question mark over whether the Florida state government would liberalise such gaming in the state.
This purchase, however, is sizeable, indicating the group's confidence in the success of the mixed development project.
Assuming bank borrowings of US$200mil (85% of total price), estimate that its net cash will fall by about 33% to RM1.5bil. The total price accounts for less than 1% of the group's shareholders' equity.
While it is still early to assess earnings impact for RWM, do not expect any meaningful contribution over the next two to three years (2011-2013). Genting Malaysia's foray into the United States, if successful, will help diversify earnings base and spur growth.
1 comments:
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