In what could set a record for urban real estate transactions in Florida, Genting Malaysia is poised to sell 16.5 acres of undeveloped real estate along Biscayne Bay for $1.23 billion.
SmartCity Miami, a consortium led by David Martin’s Terra, is the winning bidder for the gaming giant’s unused land. Terra is a well-known South Florida real estate developer with interests in apartment, luxury condo, office, and retail projects.
Genting put the land on the market last November after abandoning hopes of ultimately building a casino resort there. Construction of new gaming venues in Florida is difficult because of the stranglehold on the state’s gaming industry maintained by the Seminole Tribe. The tribe operates casinos under the Hard Rock brand.
The Asia-Pacific casino giant openly said it was seeking bids of $1 billion or more. By late March, it reportedly had five such offers.
Genting Wringing Massive Profit from Miami Land
While Genting’s hopes of building an integrated resort in South Florida didn’t come to fruition, the operator is poised to realize a significant profit on the land sale.
The company acquired the acres in 2011 for $259 million and, even when factoring in carrying costs of $255 million, Genting’s profit is around $966 million, according to Nomura analysts.
This is a large windfall for the company, in our view, and will help improve the balance sheet for both Genting Malaysia and Genting after years of capex, COVID-19 related slowdown and generous dividends, which have resulted in its net debt-to-equity rising from 19% as of end-2019 to 71% as of end-2022. A rough calculation shows that Genting Malaysia’s net debt to equity will fall back sharply to 21% post the sale,” noted the research firm.
Genting plans to keep the acres on which the Hilton Miami Downtown hotel and Omni Center currently reside.
Genting Could Direct Miami Land Cash to New York
Genting could deploy proceeds from the Miami land sale in a variety of ways, but it’s expected the cash will be retained for the time being and then directed to the operator’s efforts to procure one of the three downstate casino licenses to be awarded in New York.
We believe the cash proceeds are likely to be retained within the company for the time being to help fund the down-state New York gaming license capex, should Genting Malaysia be successful in the bidding process. We expect the license award timeline in 1Q24,” added the Nomura analysts.
Genting runs Resorts World New York in Queens, a slots-only venue that, along with MGM’s Empire City Casino in Yonkers, is widely expected to be “grandfathered” into a traditional casino permit. Proceeds from the Miami land sale could defray Genting’s licensing and expansion costs in New York.
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