Buyer is Rubico Acquisition Corp.
Caesars Entertainment Inc. and VICI Properties Inc. have agreed to the $22m sale of Harrah’s Louisiana Downs Casino, Racing & Entertainment to Rubico Acquisition Corp.
Caesars will pocket $16.5m and VICI $5.5m
Subject to the usual adjustments for cash and net working capital, Caesars will pocket $16.5m and VICI $5.5m. The transactions, conditional on regulatory ratifications and other closing conditions, are expected to conclude late 2020 or early 2021. Caesars Entertainment announced the sale of the property in a press release on Thursday.
Located in Bossier City, the Harrah’s Louisiana Downs racino combines a racetrack with a casino and entertainment complex featuring 800 slot machines. Real estate investment trust VICI Properties occupies the role of property landlord.
Caesars not resting on its laurels
On July 20, Caesars Entertainment Corporation and Eldorado Resorts came together in a $17.3bn merger deal to create Caesars Entertainment Inc., the largest casino and entertainment company in the United States.
In a press release at the time, the CEO of the newly formed company, Tom Reeg, spoke of “executing on the numerous opportunities ahead to create value for all stakeholders.” With the Harrah’s sale to go by, Reeg is not wasting any time in making good on that assurance.
“As Reeg’s priorities unfold, we see exponential post-virus earnings growth propelled by diminishing leverage, synergies, and a tighter focus on the customer-centric culture inherited from Eldorado,” casino industry analyst Howard Jay Klein observed.
The merger also meant that the Caesars Rewards loyalty scheme welcomed new members from Eldorado, swelling its membership to over 60 million and making it the industry’s largest loyalty programme.
Veni, Vidi, VICI
In the press release, Caesars also stated that “annual base rent payments under the Regional Master Lease between Caesars and VICI will remain unchanged.” VICI – which owns some of the US’s most premier entertainment and casino properties, including Caesars Palace – has also been blazing a trail of fiscal success.
Caesars-Eldorado transaction added $253m of incremental annual rent
Speaking at a Q2 2020 earnings call on July 30, VICI president and COO John Payne highlighted the firm’s “transformative transaction” as part of the Caesars-Eldorado merger. He said VICI acquired Harrah’s casinos in Atlantic City, Laughlin, and New Orleans and “modified its existing leases with Caesars” for a total consideration of $3.2bn.
Payne said the Caesars-Eldorado transaction added $253m of incremental annual rent for his organization, while strengthening the terms of its leases with Caesars.
