Canada – Century announces sale-leaseback of four casinos in Alberta with VICIBy Phil - 17 May 2023
Century Casinos has entered into a definitive agreement for subsidiaries of VICI Properties to acquire the real estate assets of Century Casino & Hotel Edmonton, Century Casino St. Albert and Century Mile Racetrack and Casino in Edmonton, Alberta and Century Downs Racetrack and Casino in Calgary, Alberta for an aggregate purchase price of US$164.4m.
Simultaneous with the closing of the transaction, the Century Canadian Portfolio will be added to the existing triple-net master lease agreement between subsidiaries of VICI and subsidiaries of the company and annual rent will increase by US$$12.8m based on the exchange rate on May 16, 2023) representing an implied acquisition capitalization rate of 7.8 per cent.
The property-level rent coverage ratio under the Master Lease, adjusted for the pending acquisition of Rocky Gap Casino Resort and the Century Canadian Portfolio, is expected to be approximately 2.0x.
Additionally, the term of the Master Lease will be extended such that, upon closing of the transaction, the lease will have a full 15-year initial base lease term, with four 5-year renewal options. The Company’s obligations under the Master Lease will continue to be guaranteed by Century Casinos, Inc.
“We are pleased to extend our good partnership with VICI to our Canada portfolio,” Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. “This transaction unlocks the real estate value of our Canadian properties while continuing our Canadian operations and provides us with greater financial flexibility as we continue to grow. We intend to use the sale proceeds to fund improvements at the Nugget and for general corporate purposes. We are also looking at the potential to apply some proceeds to paydown debt under our credit agreement and/or to return funds to shareholders through stock repurchases and/or a special dividend. We continue to evaluate the optimal use of our capital”, they concluded.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to close in the second half of 2023.