Real estate investors Vici Properties have completed their previously announced deal with Caesars Entertainment Corporation. The new agreement has seen Vici acquire and then lease back all of the land and real estate used by the Harrah’s Philadelphia casino for an original amount of $241.5m, subsequently reduced to $82.5m in order to reflect the present net value of the lease modifications.
As part of the deal, Caesars and Vici have also adjusted the terms of their long–term Las Vegas and non-Las Vegas lease agreements.
Speaking about the deal, the CEO of Vici, Edward Pitoniak said that the two companies had worked well together to conclude the transaction, and that the acquisition of Harrah’s Philadelphia would boost his company’s presence in the mid-Atlantic gaming market:
“The Vici and Caesars teams worked very productively together to complete this important and value-creating transaction for both companies.”
The deal has a number of benefits for Vici shareholders, including an increase in rental income and a degree of insurance against the potential volatility of real estate value in 2019. Under the terms of the arrangement, Harrah’s Philadelphia will pay an additional $21 million in rent annually, and an extra $7.1 million in incremental rent escalators during the first year.
For Caesars, the deal has the advantage of offering the company additional financial flexibility, while reducing the potential volatility of their future rental payments.
Image sourced from Pixabay.