- 黑石宣布42.5亿美元收购美高美旗下宝丽嘉酒店，并以2.45亿美元年租金出租于美高美集团，对黑石而言，该收购价是其年收入（租金）的17倍, 资本化率5.76%
- Steady growth in the overall economy and real estate
- Active capital investment in Las Vegas
- Available prime land scarce, raising appreciation potential
Steady Growth and Upward Momentum in All Sectors
11 years after the 2008 Recession, the economy of Las Vegas remain steadily growing. In 2019, Las Vegas was ranked as the No.1 world convention market for the 5th consecutive year, top 2 destination for international tourists, and top 5 of most visited US cities. Hotel occupancy rate reached over 90% for the third consecutive year, and culminating in 92% in 2019. Significant capital investment has been made in all sectors such as commercial, industrial, tourism, sports and technology. Estimated GDP growth rate in 2019 will reach 5%, precedes many other major US cities such as New York, Chicago and Los Angeles.
Hospitality development remains healthy. Year over year growth in Average Daily Rate (ADR) was 3.9%, 4.6% growth in Revenue per Available Room (RevPAR). In the first half of 2019, taxable sales in the leisure and hospitality sector grew by 3.6% year-over-year, 2.4% growth in employment in the sector. Hotel room inventory remain the same level at ~143,000. Shortage of hotel rooms in the near future will result in a pressing need for new hotel projects.
1.33 million square feet of industrial net absorption were added in 2019 Q3, industrial vacancy rate 3.5%, lowest in the past 4 years. Year over year employment rate increase by 1.9%.
Retail store vacancy rate 6.9%, lowest in the past 3 years. Average asking lease rate increased by 15% (year over year), highest in the past 4 years.
Multifamily inventory keeps growing, year over year vacancy rate increased 4.2%, average rental rate increased by 8%, thereinto, premium properties rental rate increased by 10%. Total multifamily unit sales revenue is estimated to reach 150 million USD in 2019.
Housing price index has grown for 26 consecutive years in Las Vegas, second longest in US, home price increased by 18% in the past 12 months.
Active Capital Investment
In the past 4 years, over $20 billion dollars has been targeted for investment into Las Vegas, resulting in over 70K jobs for the area. New multi-billion mega projects such as Malaysia’s Genting Resort, Global Business District, MSG Sphere, NFL Raiders Stadium, and the Drew are estimated to finish and open in the next 2-3 years. The capital of entertainment will soon introduce a new look to the world.
In 2019, there has been a significant capital inflow targeted towards Las Vegas. International real estate groups and top wall street PE firms are entering the market and acquiring strategic projects in this fast-growing town:
- Blackstone announced to the acquisition of Bellagio Las Vegas for 4.25 billion USD with a lease back to MGM for an annual rent of 245 million USD. The purchase price implies 17 times of annual income and 5.76% CAP rate for Blackstone
- Casino giant Phil Ruffin announced the acquisition of Circus Circus Las Vegas for 825 million USD, the hotel’s cash flow was ranked No.1 in all MGM properties
- NBA Milwaukee Bucks co-owner announced the acquisition of Rio hotel for 516 million USD. In 2-3 years, the property will be sold to an end-user for redevelopment or potentially be the first NBA stadium of Las Vegas
- UFC promoter, casino/hotel investor Fertitta family broke Las Vegas record by investing 600 million USD in Palms resort for renovation, the hotel has reopened after the commencement of its phase 1 construction in Q2 2019. Since its reopening, Palms has become one of the most popular destinations in Las Vegas
- New York 21 Century founder, wall street investor Gindi brothers announced the acquisition of a 9.5 acre parcel in Las Vegas strip for 173 million USD. The property will be built for retail, restaurant and entertainment
- The Rita Suites in Las Vegas strip was sold for 200 million USD
- Las Vegas Hampton airport Inn & Suites of Hilton was sold for 200 million USD
Since 2016, there has been a wave of capital investment pouring into Las Vegas. Commencement of these projects will bring generate substantially more traffic into the town.
During an interview after the announcement of Circus Circus acquisition in October 2019, Phil Ruffin mentioned that at current stage, there are very few large scale projects that remain in the Las Vegas core area. Especially in the Strip, Circus Circus was considered as one the last pieces of its magnitude.
Since 2011, Oasis has actively invested into the Las Vegas land market. In 2017, the company secured LVSM which is located at the intersection of Las Vegas strip and Spring Mountain Road.
According to Collier’s 2019 Q1-3 land report, industrial, commercial and residential land price keeps increasing. Oasis believes part of the reasons are high density of land & asset acquisition and development activities. Under the escalating international trade friction in 2019, stricter cross-border investment control by the central government, investment options for Chinese investors are very limited. Based on over 10 years of local observation, as a fast-developing new Tier 1 city, Oasis considers Las Vegas as a prime investment target with high growth potential.