– Acquiring Market-Leading Properties at
Attractive 7.8% Capitalization Rate – – Further Diversifying Tenant
Roster Through Long-Term Partnership with JACK Entertainment – –
Acquisition Expected to be Immediately Accretive at Closing –
VICI Properties Inc. (NYSE:VICI) (“VICI Properties” or the
“Company”), an experiential real estate investment trust, today
announced it has entered into a definitive agreement with an
affiliate of JACK Entertainment LLC (“JACK Entertainment”) to
acquire 100% of the membership interests of its affiliates that own
casino-entitled land and real estate and related assets associated
with JACK Cleveland Casino, located in downtown Cleveland, Ohio,
and JACK Thistledown Racino, located approximately 10 miles
southeast of downtown Cleveland in the city of North Randall, Ohio,
for an aggregate purchase price of approximately $843.3 million in
cash.
Simultaneous with the closing of the transaction, the Company
will enter into a master triple-net lease agreement with JACK
Entertainment related to the assets. The master lease will have an
initial total annual rent of $65.9 million, for an implied
capitalization rate of 7.8%, and an initial term of 15 years with
four 5-year tenant renewal options. The rent coverage ratio at
closing is expected to be approximately 1.72x and the tenant’s
obligations under the lease will be guaranteed by Rock Ohio
Ventures LLC. Additionally, the Company will provide a $50 million
loan secured by certain non-gaming real estate assets of Rock Ohio
Ventures LLC, which will bear interest at 9.0% for a period of five
years with two 1-year extension options.
John Payne, President and Chief Operating Officer of VICI
Properties said, “We are excited to partner with the team at JACK
Entertainment as they focus on investing and operating in the
Cleveland market. Ohio continues to be one of the healthiest and
fastest growing regional gaming markets and we are thrilled to add
high-quality, urban real estate to our portfolio at an attractive
capitalization rate. This transaction represents another great
example of VICI’s ability to creatively source and execute
accretive deals that bring value to our shareholders, while
furthering our strategic goal to diversify our roster of
best-in-class gaming operators.”
“JACK Entertainment looks forward to continuing to operate JACK
Cleveland Casino and JACK Thistledown Racino,” said Mark Dunkeson,
Chief Executive Officer of JACK Entertainment. “The combined
efforts of our gaming properties together with the other Cleveland
assets operated by our sister companies including the Cleveland
Cavaliers, Avenue Shops at Tower City and the May Company Building,
have created a strong connection to the city and allows us to
remain heavily committed to the Cleveland area. We have invested
more than $700 million into JACK Cleveland Casino and JACK
Thistledown Racino since the properties opened in 2012 and we will
continue to invest significant capital into these properties which
will have a lasting positive impact on the city and Cuyahoga
County.”
David Kieske, EVP, Chief Financial Officer of VICI Properties,
also commented, “The acquisition of JACK Cleveland Casino and JACK
Thistledown Racino will add an additional $65.9 million of rent to
our portfolio upon closing. Importantly, we will not issue
additional equity to finance the transaction as we prudently
secured our equity funding requirements through our successful June
2019 equity offering. Accordingly, we anticipate closing our
remaining pending transactions, including our previously announced
transactions with Century Casinos, Inc. and Eldorado Resorts, Inc.,
on a leverage-neutral basis.”
JACK Cleveland Casino opened in May 2012 in the historic Higbee
Building in downtown Cleveland, Ohio. The property features
approximately 96,000 square feet of gaming space, 1,300 gaming
machines, over 120 table games and eight food and beverage outlets.
The property is connected to the 205-key Ritz-Carlton and 440-key
Renaissance hotels in downtown Cleveland. JACK Thistledown Racino
opened in April 2013 in North Randall, Ohio and is the leading
thoroughbred racino in the Cleveland MSA. The property is situated
on 129 acres and features approximately 57,000 square feet of
gaming space, 1,459 gaming machines and six food and beverage
outlets.
The transaction is subject to regulatory approvals and customary
closing conditions and is expected to close in early 2020. The
acquisition is expected to be accretive immediately upon
closing.
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."
Goldman Sachs & Co. LLC is acting as financial advisor and
Kramer Levin Naftalis & Frankel LLP is acting as legal advisor
to VICI Properties for the transaction described herein.
About VICI Properties
VICI Properties is an experiential real estate investment trust
that owns one of the largest portfolios of market-leading gaming,
hospitality and entertainment destinations, including the
world-renowned Caesars Palace. VICI Properties’ national,
geographically diverse portfolio consists of 24 gaming facilities
comprising over 40 million square feet and features approximately
15,200 hotel rooms and more than 150 restaurants, bars and
nightclubs. Its properties are leased to industry leading gaming
and hospitality operators, including Caesars Entertainment
Corporation, Penn National Gaming and Hard Rock International. VICI
Properties also owns four championship golf courses and 34 acres of
undeveloped land adjacent to the Las Vegas Strip. VICI Properties’
strategy is to create the nation’s highest quality and most
productive experiential real estate portfolio. For additional
information, please visit www.viciproperties.com.
Forward-Looking Statements
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
we may not achieve the benefits contemplated by the acquisition of
the JACK Cleveland Casino and JACK Thistledown Racino
casino-entitled land and real estate and related assets; that not
all potential risks and liabilities have been identified us in our
due diligence of the JACK Cleveland Casino and JACK Thistledown
Racino real estate assets; that our pending transactions with
Century Casinos, Inc. and Eldorado Resorts, Inc. (the “pending
transactions”) may not be consummated on the terms or timeframes
previously disclosed, 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 governmental and regulatory approvals and consents
required to consummate our pending transactions, or other delays or
impediments to completing these transactions; our ability to obtain
the financing necessary to complete our pending transactions on the
terms we currently expect or at all; disruptions to the real
property and operations of the subject properties during the
pendency of the closing of the pending transactions; and risks that
the Company may not achieve the benefits contemplated by the
pending 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 Securities and Exchange Commission. The Company does not
undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise, except as may be required by applicable law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191028005379/en/
Investors: Investors@viciproperties.com (646) 949-4631 Or
David Kieske EVP, Chief Financial Officer
DKieske@viciproperties.com
Danny Valoy Vice President, Finance
DValoy@viciproperties.com
Media: PR@viciproperties.com (646) 949-4631 Or ICR Phil
Denning and Jason Chudoba Phil.Denning@icrinc.com, (646) 277-1258
Jason.Chudoba@icrinc.com, (646) 277-1249
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