GALAXY GOES FOR 5-STAR OPTION

2014/10/23

From：Macau Business Daily

GEG decides on deluxe after all. Galaxy Entertainment Group is now planning to expand the capacity of its 5-star hotel.

Galaxy Entertainment Group has decided to scrap the project for a 4-star apartment hotel on a land parcel that is going to be used for Phase 2 and Phase 4 of Galaxy Macau. The land will be used instead to increase the capacity of its 5-star hotel.
In September 2009, Galaxy and the Macau Government signed a contract for the land grant of the Cotai area. The total rented area occupied 440,248 square metres and valued at MOP2.9 billion.
The first contract also stated that the land would be divided into four parcels. Parcel I was to occupy 223,560 square metres (MOP1.35 billion), parcel II was to occupy 61,049 square metres (MOP421 million), parcel III was to occupy 48,000 square metres (MOP211 million) and parcel IV was to occupy107,639 metres (MOP937 million).
Nonetheless, the government published yesterday in the Official Gazette an amended contract. According to the new document, parcels I and II will be combined to create a new parcel designated I/II occupying 284,602 square metres worth MOP1.95 billion.
However, the most important change is that the company has decided to give up on the project for a 4-star apartment hotel and its parking spaces. Instead, Galaxy has opted to expand the 5-star hotel and parking spaces also planned for the same land parcel. All the area for the 4-star apartment hotel and parking spaces is now incorporated in the 5-star facilities.
Parcel I/II is the area where Phase 2 is being built and where the future Phase 4 is also going to be erected. According to the late interim report by the company, Phase 2 of Galaxy Macau will open by mid next year. As for Phase 4, the site investigation will start later this year.
The first request to eliminate the 4-star apartment hotel and to increase the capacity of the 5-star facilities was handed to the government on January 21.
These changes will not affect the rental price that Galaxy will have to pay to the government for the land. While construction works continue, the company will pay per year MOP8.5 million for parcel I/II, MOP1.4 million for parcel III and MOP3.2 million for parcel IV.
As the works are completed and the areas operational, Galaxy will pay every year MOP16.3 million for parcel I/II, MOP2.7 million for parcel III and MOP8.2 million for parcel IV. The rental contract is due to expire on 14 October 2034.

A Galaxy representative told Business Daily that the company is increasing its “flexibility for development by consolidating Lots I and II, which will allow [Galaxy] to move and reposition accommodation.” In addition, Phase 3 and 4 will not be delayed, the representative assured, adding that “developing large-scale resorts is a very complicated exercise.” The initial site investigation for these two phases are expected to begin at the end of the year, he added.
Meanwhile, the rental contract signed by the government and Sands China – represented in the document by Venetian Cotai, Venetian Macau and Cotai Strip Lote 2 Apart Hotel (Macau) – was also amended due to the need to make a ‘little adjustment to the north limit of parcel III [where Parisian is being built] in order to best fit the building being erected on the parcel’, the Official Gazette announced.
Until the contract published yesterday the area rented to Sands China, excluding the land for Sands Cotai Central, totalled 405,658 square metres. The land was divided into three parcels: parcel I (291,479 square metre), which was used for The Venetian, parcel II (53,700 square metre), where the Four Seasons is located, and parcel III (60,479 square metre), where the Parisian is being built and is due to open in late 2015.
However, with the new changes – which were requested on 21 August 2013 – parcel I was reduced to 290,562 square metres, parcel two was cut to 53,303 square metres and parcel III was increased to 61.681 square metres. Plus 112 square meters of land near Avenida Cidade Nova was handed to the government.
Sands China refused to comment on the changes to the contract with the government, after being contacted by Business Daily.

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