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US – VICI agrees deal with Eldorado ahead of Caesar’s take-over

By - 8 July 2019

VICI Properties, Caesars Entertainment’s experiential real estate investment trust, has entered into a definitive agreement with Eldorado Resorts in connection with Eldorado’s proposed business combination with Caesars.

VICI will buy the land and real estate assets associated with Harrah’s New Orleans, Harrah’s Laughlin, and Harrah’s Atlantic City and modify certain provisions of the existing Caesars lease agreements for total consideration of approximately $3.2bn in cash.

VICI Properties and Eldorado will enter into a put-call agreement, whereby the Company has a call right to acquire, and Eldorado has a put right to require that the company acquire, the land and real estate assets associated with Harrah’s Hoosier Park and Indiana Grand.

VICI Properties will be granted rights of first refusal for whole asset sale or sale-leaseback transactions on two Las Vegas Strip properties, and a right of first refusal for a sale-leaseback transaction on Horseshoe Casino Baltimore. The first Las Vegas property will be selected among the following: Flamingo Las Vegas, Bally’s Las Vegas, Paris Las Vegas and Planet Hollywood Resort & Casino, with the second property to be one of the previous four plus the LINQ Hotel & Casino.

Ed Pitoniak, Chief Executive Officer of VICI Properties, said: “Upon closing, this transformative transaction will deliver significant and immediate value to our shareholders, along with replenishing our pipeline of growth opportunities for years to come. Most fundamentally, we are buying high-quality real estate at a very attractive cap rate, yielding our shareholders immediate accretion at closing. We are significantly enhancing the quality, security and term of our leases with our main tenant. Longer term, we are restocking a pipeline of growth opportunities that will allow us to continue to grow well into the future. We are doing all this with a great new partner in Eldorado. We took a holistic, partnership approach with Eldorado to building the strongest combination of operating and real estate excellence in American gaming. The reason we believe in the transformative nature of this transaction is quite simple – it will increase the value of our real estate now and over the long term.”

Tom Reeg, Chief Executive Officer of Eldorado, said: “In partnering with VICI Properties, we can unlock embedded real estate value allowing both companies to advance their respective growth strategies. As we considered pursuing this strategic and transformative transaction, we were delighted to establish this important and meaningful partnership with VICI as it will be a critical factor in our ability to drive near- and long-term value from the proposed extraordinary combination with Caesars Entertainment.”

John Payne, President and Chief Operating Officer of VICI Properties, said: “Eldorado has a long history as a preeminent operator of US gaming assets. Beyond that, they also have a track record that is unmatched in the industry today in integrating and improving results at acquired properties. We believe their vision and approach combined with the strengths of the Caesars platform, including the Caesars Rewards loyalty program, will bring a paradigm shift to the combined company, dramatically improving the long-term outlook of our largest tenant. The new company, to be known as Caesars, will be the largest domestic gaming operator in America, with an unrivalled national footprint, with what we believe is by far the best hub and spoke system in American gaming, and the best opportunity to capitalise on the popularization of sports betting.”

Deutsche Bank Securities is acting as financial advisor for the deal.

Caption: Harrah’s Resort in Atlantic City

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