Malaysia-based Genting USD 1.1B purchase of Miami land falls through

Genting Malaysia’s plan of acquiring a 15.5-acre property in Miami, Florida for US$1.23 billion has will not push through, execs tell.

The fallout of the deal comes after the purchaser Smart Miami City LLC decided to end its current bid additional amendments to the terms of the sale. Genting decided not to grant said requests.

The company said Smart Miami City remains interested in the land. The latter will also continue to review other opportunities to close on a sale while continuing to enhance its remaining Miami holdings.

“Genting Malaysia has seen the value of its investment in Miami increase approximately 400% in just over a decade and firmly believes in the sustained strength and growth of the Miami market,” it explained.

Nomura analysts Tushar Mohata and Alpa Aggarwal were “negatively surprised” by the news. The sale would have seen Genting Malaysia generate a pre-tax gain of US$966 million and a post-tax gain of US$743 million.

The transaction would have also funded the expansion of the company’s New York City casino should it win one of three full licenses up for grabs.

“The sale, had it gone through, would have generated a large windfall for the company … and would have helped repair the balance sheet of both Genting Malaysia and parentco Genting Bhd by significantly lowering net debt to equity,” the analysts said.

“While we still await clarity from management on the exact reason for the failed sale, one factor that we think which could have affected the outcome was the sharp deterioration in the commercial real estate market in the US over the past few months, and banks’ reluctance to finance large transactions, especially after the bank failures seen recently.”

Other reports suggest that Genting Malaysia will likely negotiate with one of four other companies to have initially bid for the land.

Genting Malaysia first purchased the land in question for US$259 million in 2011 with plans to develop a large-scale integrated resort dubbed Resorts World Miami. However, hopes that Florida might push through new gambling legislation to allow such a development were never realized and it is considered unlikely any such legislation will happen in the foreseeable future.

Genting also owns the Hilton Miami Downtown hotel and connected Omni Center.

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