VICI Properties Inc. Enters Transformative Partnership With Eldorado Resorts Related to the Proposed Combination With Caesars Entertainment
– Transaction Expected to be Immediately Accretive at Closing –
– Refuels Embedded Growth Pipeline and Strengthens Existing Lease Terms–
VICI Propertieswill acquire all of the land and real estate assets associated with Harrah’s New Orleans, Harrah’s Laughlin, and Harrah’s Atlantic City(collectively, the “Properties”) for an aggregate purchase price of approximately $1.8 billion. Simultaneous with the closing of the acquisition of each Property, each applicable Property will be added to the Non-CPLV Master Lease Agreement. The Non-CPLV annual rent will increase at closing of the Property acquisitions by $154.0 million, for an implied capitalization rate of 8.5%;
In consideration of approximately
$1.190 billionand $214.0 million, the rent under the CPLV Lease Agreement and the HLV Lease Agreement will increase by $83.5 millionand $15.0 million, respectively. The CPLV Lease Agreement and HLV Lease Agreement will be amended and combined into a single master lease agreement (the “Las Vegas Master Lease”). The Las Vegas Master Lease will operate under the existing CPLV Lease Agreement terms, subject to the additional lease modifications described below;
- All rent coverage floors under the existing Caesars leases (as amended to reflect the inclusion of the Properties into the Non-CPLV Master Lease Agreement and the creation of the Las Vegas Master Lease) will be eliminated;
- All existing Caesars leases will be modified to reflect a uniform parent guarantee from the newly combined entity;
- All existing Caesars leases will be extended such that, upon the closing of the merger, a full 15-year initial lease term will remain prior to expiration of the initial lease term;
VICI Propertiesand 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 Parkand Indiana Grand (together, the “Centaur Assets”). The purchase price related to the put option from Eldorado would be an 8.0% capitalization rate (or 12.5x the initial annual rent). The purchase price related to the call option would be a 7.7% capitalization rate (or 13.0x the initial annual rent). The initial annual rent for the Centaur Assets would be the amount that causes the ratio of EBITDAR of the property to the initial property lease rent to equal 1.3x. The put-call agreement may be exercised by either party between January 1, 2022and December 31, 2024;
VICI Propertieswill 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 Vegasproperty 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.
The foregoing transactions are subject to the closing of the Eldorado/Caesars combination, and such transactions and the Eldorado/Caesars combination are both subject to regulatory approvals and customary closing conditions. Eldorado has publicly disclosed that it expects the merger to close in the first half of 2020.
The VICI transactions described above are expected to be accretive immediately upon closing and the Company intends to fund the transactions through a combination of cash on hand, equity and long-term debt financing.
In addition to this release, the Company has furnished a Transaction Overview presentation, which is available on our website in the "Investors" section, under the menu heading "Events & Presentations."
This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. All statements other than statements of historical fact are forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements. Among those risks, uncertainties and other factors are risks that the Eldorado/Caesars strategic combination may not be consummated in timeframe described herein, or at all; risks that the acquisition of the Properties may not be consummated on the terms or timeframe described herein, or at all; risks that the lease amendments and modifications may not be consummated on the terms or timeframe described herein, or at all; the ability of the parties to satisfy the conditions set forth in the definitive transaction documents, including the ability to receive, or delays in obtaining, the regulatory approvals required to consummate the transactions; the terms on which the Company intends to finance the transaction, including the source of funds used to finance such transaction; disruptions to the real property and operations of the Properties during the pendency of the closing; and risks that the Company may not achieve the benefits contemplated by the transactions (including any expected accretion or the amount of any future rent payments). Important factors that may affect the Company’s business, results of operations and financial position are detailed from time to time in the Company’s filings with the
Vice President, Finance