VICI Properties involvement in the Eldorado Resorts-Caesars Entertainment merger has triggered the real estate investment trust to raise more than $2.5 billion through new debt.
The New York-based company, such currently owns 27 gaming properties that are leased back to four casino operators, said $2 billion will be used to complete several transactions that are part of the $17.3 billion Eldorado-Caesars deal. The remaining proceeds will be used to pay off in full $498.5 million in debt due in 2023.
The maturity dates of the new debt will be spread out between 2025, 2027, and 2030.
Jefferies gaming analyst David Katz told investors the VICI announcement “implies a comfort” that merger, in which Reno-based Eldorado will assume management of Caesars Entertainment, creating a regional gaming giant in 18 states, is “progressing toward closing within the expected first quarter of 2020 timeframe.”
As part of the merger, three Caesars properties under the Harrah’s brand in Atlantic City, Laughlin, Nevada and New Orleans were sold to VICI for a combined $1.8 billion. VICI will lease the operations back to Eldorado for total annual rent of $154 million.
Fitch said VICI’s overall debt rating is stable. As of Sept. 30, VICI had $4.1 billion in total debt.
Katz added that, “the accommodative conditions in the credit market provide an opportunity to position the company for future capital needs.”
VICI was spun off from Caesars Entertainment in 2017 as part of the casino company’s bankruptcy reorganization. In addition to Caesars, VICI has lease agreements covering properties operated by Hard Rock International, Penn National Gaming and Century Casinos.
#exclusive – VICI seeks $2.5B in new debt to fund deals part of the Eldorado-Caesars transaction. –@howardstutz, CDC Gaming Reports. https://t.co/JYGU0VjFbs #CDCgaming
— CDC Gaming Reports (@CDCNewswire) January 21, 2020
The Louisiana Gaming Control Board signed off on the Eldorado-Caesars merger last week, becoming the first state to approve the transaction.
The deal requires approvals by regulatory agencies in 18 states and a sign-off by the Federal Trade Commission. Eldorado, whose management team will oversee the combined company, expects to close the transaction in first half of this year.
Shares of VICI closed at $26.39 on the New York Stock Exchange Tuesday, up 12 cents or 0.46%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
