Real estate investment trust VICI Properties said on Thursday that it had canceled a previously announced $103.5 million deal to acquire 23 acres of undeveloped land parcels on the east side of the Las Vegas Strip currently owned by Caesars Entertainment.
During the company’s third quarter earnings conference call, VICI CEO Ed Pitoniak said the land, adjacent to the Caesars Forum and behind Harrah’s Las Vegas, the Linq Resort, and Flamingo Las Vegas, had entitlement and permitting issues relating to Caesars’ parking obligations.
“It was not going to be easy to unwind those quickly,” Pitoniak said, adding that Caesars is still dealing with integration issues surrounding its $17.3 billion merger with Eldorado Resorts, a deal that was completed in July, along with mergers and acquisition activities.
“For the meantime, we put that initiative aside and then, perhaps, return to it at a time when the dust has settled a bit post-merger,” Pitoniak said.
The 23-acre parcel, when paired with an additional 27 acres of undeveloped land behind Bally’s Las Vegas, Paris Las Vegas, and Planet Hollywood that VICI already owns, would have given the REIT a clean 50-acre slate for potential development.
Pitoniak said in July the 50 acres covers “the only large-scale opportunity to deepen the Las Vegas Strip at its center and to participate in the potential for long-term growth that this land represents.”
VICI did complete a five-year $400 million mortgage loan to Caesars Entertainment that is secured by the Caesars Forum Convention Center on the Strip.
The deal, which was originally announced in June, is for a five-year loan at 7.7% and is pre-payable in year three. VICI said it funded the mortgage loan with cash on hand.
The 500,000 square-foot Caesars Forum is behind the Linq Promenade and the High Roller Observation Wheel. Caesars Entertainment built the project at a cost of $375 million.
VICI was a factor early in the Eldorado-Caesars merger. The REIT paid $1.8 billion to acquire three Harrah’s branded casinos in Atlantic City, New Orleans, and Laughlin, Nevada and is leasing the resorts’ operations back to the new combined Caesars for $154 million in total annual rent.
Prior to the Eldorado-Caesars merger, VICI owned the land and buildings associated with Caesars Palace and Harrah’s Las Vegas, two center-Strip landmarks.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
