VICI Properties to Buy Harrah’s Las Vegas Casino from Caesars in $1.14 Billion Sale-Leaseback Deal

by Camren Skelton

Las Vegas — An affiliate of Caesars Entertainment Corp. has agreed to sell the real estate assets of Harrah’s Las Vegas Hotel and Casino on the Las Vegas Strip for $1.14 billion.

The buyer is VICI Properties Inc., a Las Vegas-based REIT spun off last month from Caesars Entertainment Operating Co. Inc., a subsidiary of Caesars Entertainment.

As part of the transaction, VICI will lease back the land and real estate to Caesars under a 15-year, triple-net lease agreement with four five-year renewal options.

Harrah’s Las Vegas spans 4.1 million square feet and contains 90,600 square feet of casino space and 2,530 hotel rooms. The property features a Mardi Gras and carnival theme, with 16 restaurants and bars, retail shopping, spa services, a parking garage and 24,000 square feet of meeting space.

VICI Properties also entered into a definitive agreement with Caesars to sell approximately 18.4 acres of undeveloped land located behind the LINQ Hotel & Casino and Harrah’s Las Vegas for $73.6 million. It is expected that Caesars will use the land with certain other parcels to construct a convention center adjacent to Harrah’s Las Vegas.

“These transactions illustrate the growth potential provided by our partnership with Caesars,” says Ed Pitoniak, CEO of VICI Properties. “We improve our portfolio with an iconic Las Vegas center strip asset at a very attractive cap rate on in-place NOI, while also increasing our overall portfolio exposure to Las Vegas.”

The two transactions are conditional on each other and are expected to close in December 2017. Caesars’ obligations under the Harrah’s Las Vegas lease would be guaranteed by Caesars Resort Collection LLC.

VICI Properties has secured debt financing commitments from Goldman Sachs Bank USA and Morgan Stanley Senior Funding Inc. The company may pursue additional equity and debt financing options.

Stifel is acting as lead strategic advisor to VICI. Millstein & Co., Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are acting as financial advisors. Kramer Levin Naftalis & Frankel LLP is acting as legal advisor, and ICR LLC is acting as communications advisor to VICI.

VICI Properties’ portfolio consists of 19 gaming facilities totaling 32.5 million square feet and features approximately 12,000 hotel rooms and more than 150 restaurants, bars and nightclubs. Its properties are leased to brands such as Caesars, Horseshoe, Harrah’s and Bally’s. The REIT also owns four championship golf courses and 53 acres of undeveloped land adjacent to the Las Vegas Strip.

VICI’s stock price closed on Wednesday, Nov. 29 at $19 per share, up from $18 per share when the stock began trading on Oct. 20.

Caesars Entertainment’s stock price closed on Wednesday at $13.35 per share, up from $7.50 per share this time last year.

— John Nelson

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