Caesars Entertainment and VICI Properties said on Thursday that the companies have completed a long-planned acquisition and leaseback of two properties, a deal planned after the real estate investment trust was spun off from the casino operator following a bankruptcy reorganization.
VICI, which owns the real estate assets of nearly 20 Caesars properties, acquired the Octavius Tower at Caesars Palace for $507.5 million. Caesars will continue to operate the tower – and pay VICI annual rent of $35 million.
In addition, VICI will acquire the real estate assets associated with Harrah’s Philadelphia – a racetrack and casino property – for $241.5 million. However, the sale price will be reduced by $159 million to reflect various value modifications. The transaction is expected to close by the end of the year.
The transactions were agreed to in a letter of intent in May.
“These agreements with VICI unlock more than $500 million in value from our real estate assets to support value-adding growth opportunities and reduce the volatility of our future rent payments,” Caesars CEO Mark Frissora said in a statement.
VICI will lease the operations of Harrah’s Philadelphia back to Caesars through a long-term agreement for a term that relates to the company’s other domestic properties.
Last month, VICI announced plans to acquire the Margaritaville Resort Casino in Bossier City, La., for $261 million. Penn National Gaming will acquire the operations of the property for $115 million and will pay annual rent of $23 million. The deal was VICI’s first with a casino operator other than Caesars.
Caesars, last month, was approved by Indiana gaming regulators to acquire two racetrack casinos for $1.7 billion.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
