US – Century Casinos snaps up Rocky Gap Casino Resort in MarylandBy Phil - 30 August 2022
Century Casinos, Inc., announced that it entered into a definitive agreement to acquire the operations of Rocky Gap Casino Resort, from Lakes Maryland Development, LLC for approximately $56m, subject to certain adjustments. The Company will fund the acquisition using cash from its balance sheet.
Simultaneous with the closing of the transaction, an affiliate of VICI Properties Inc. will acquire the real estate assets for approximately $204m and the Company will amend its triple net lease agreement with VICI to add the Rocky Gap property. The amendment to the lease will include initial annual rent for the Rocky Gap casino of approximately $15.5 million.
The purchase price for the casino operations represents an implied 2021 earnings before interest, taxes, depreciation and amortization multiple of 4.9x. The multiple excludes any potential cost synergies and operational improvements and deducts annual rent from the VICI lease from EBITDA. The acquisition is expected to be immediately accretive to the Company’s earnings.
“The addition of Rocky Gap is another important milestone in our pursuit to acquire prime US assets. With this acquisition and our pending acquisition of the Nugget Casino Resort in Nevada, we will oversee a US portfolio that reaches from east to west,” Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. “We are looking forward to working with the Maryland Lottery and Gaming Control Agency to obtain gaming approvals and with the casino leadership and team members to effect a smooth transition and great future for Rocky Gap,” they concluded.
Rocky Gap is located in Flintstone, Maryland in Rocky Gap State Park, which attracts over half a million visitors annually. The full-service resort sits on approximately 270 acres and includes an 18-hole golf course designed by Jack Nicklaus, a 5,000 square-foot events center, several meeting spaces, a spa, and several outdoor activities. The property consists of over 25,000 square feet of gaming floor, 630 slot machines, 16 table games, 198 hotel rooms and five food and beverage venues. Rocky Gap Casino Resort had net operating revenue of $78m and Adjusted EBITDA of $27 million for the year ended 31 December 2021.
The property has recently invested $10m in improvements to its hotel, slot machines, restaurants, and sports lounge. There is potential to expand the casino and hotel and capture more customers from adjacent markets. Additionally, Century will have the opportunity to partner with a sports betting operator in Maryland to bring sports betting to Rocky Gap.
Upon closing of the Rocky Gap acquisition and the pending acquisition of Nugget Sparks, LLC which operates the Nugget Casino Resort in Sparks, NV, the Company’s North American portfolio will increase to 11 casinos that include 7,140 gaming machines and 158 table games. On a pro-forma basis after giving effect to the two acquisitions, the Company expects to generate 94% of its Adjusted EBITDA from its North American casinos.
The transaction is expected to close mid-2023, subject to regulatory and governmental approvals and customary closing conditions.
Stifel acted as exclusive financial advisor and Faegre Drinker Biddle & Reath LLP acted as legal counsel to the Company in connection with the acquisition.