Apollo Global Management (NYSE: APO) is asking Nevada regulators to approve a $550 million distribution from the Venetian on the Las Vegas Strip, which is operated by the private equity firm.
On Wednesday, the Nevada Gaming Control Board (NGCB) approved the payout, advancing that recommendation to the Nevada Gaming Commission (NGC). The NGC will take up the matter at its meeting later this month.
Should the distribution be approved by the NGC, Apollo would disburse the Venetian cash to itself and its investors. Potentially bolstering the case for the NGC to sign off on the move is the point that it would not imperil Venetian’s financial position.
We don’t need the $550 million to execute against the business plan,” Venetian CFO Robert Brimmer told the NGCB. “We have adequate liquidity and we have our capital source. With the money we have and cash flow we expect to generate, we’re able to invest this $1 billion over the next 18 months.”
At the end of last month, Venetian had $830 million in cash meaning there’d be $280 million left over if the $550 payout is approved.
In March 2021, Las Vegas Sands (NYSE: LVS) announced the sale of the aforementioned integrated resort and convention center assets to Apollo and VICI Properties (NYSE: VICI) for $6.25 billion. The private equity giant paid $2.25 billion for the operating rights while VICI paid $4 billion for the real estate.
Since taking control of the Venetian, Apollo has bolstered the venue’s financial standing while taking steps to enhance its image in Las Vegas. For example, the financial firm doled out $11 million to 7,000 full-time and flex-time workers at the integrated resort in December 2022.
More recently, VICI announced it will extend $700 million worth of financing to Apollo as part of the private equity shop’s $1 billion plan to enhance what’s already one of the most highly rated casino hotels on the Strip.
“If you walk through the property, it is different than it was two years ago and we’re just getting going. We have $1 billion in our capital plan, of which we will deploy $900 million over the 2024-25 time period,” Brimmer told the NGCB. “The asset is in great shape, and once we finish our plan toward the end of 2025, we will be in the best condition in the last 25 years. The goal here is to create more compelling experiences for guests and create strong returns for our investors and more opportunities for our team members.”
Efforts such as those are crucial, particularly from a public relations standpoint, because Apollo has a long history in Las Vegas, and not all of it is positive.
Apollo and fellow private equity firm TPG Capital executed a massive $30 billion leveraged buyout of a previous iteration of Caesars Entertainment in 2008. Nine years later, the debt-laden gaming company filed for bankruptcy, and in 2019, Apollo and TPG sold their equity stakes in the operator.
Under Apollo, Venetian Thriving
Since February 2022, Apollo has made $490 million in investments at Venetian, including new eateries as well as a fresh sportsbook and poker room.
The operator is expected to add an entertainment theater, more restaurants, and improve 4,000 rooms across Venetian and Palazzo through the end of next year. Those improvements aren’t burdening the balance sheet, which is in strong shape.
“We’re meeting budgets in the first half of the year and market trends continue to be very strong, as evidenced by the financial results the Strip released last week,” Brimmer said at the NGCB meet. “The Venetian continues to grow market share.”
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