VICI Properties Inc., the real estate investment spin-off of Caesars Entertainment, has completed its previously agreed on $162 million sale-leaseback deal with U.S.-based Century Casinos, Inc. The pact is for all four of its properties in Alberta, Canada.
The sale encompasses the real estate assets of Century Casino & Hotel Edmonton (pictured), Century Casino St. Albert, Century Mile Racetrack and Casino in Edmonton, and Century Downs Racetrack and Casino in Calgary.
Some $12.7 million in annual rent due has now been added to the overall leasing agreement between VICI and Century, which also includes Century’s recently purchased Rocky Gap Casino Resort in Maryland.
Century operates a dozen casinos across the U.S. and Canada, many of which are owned in conjunction with VICI.
Las Vegas-based VICI Properties is the biggest landlord on the famous Las Vegas Strip. Its core strategy of buy-leaseback deals has become an increasingly common sight in recent years, with casino real estate investment trusts, or REITS, popping up across North America.
Details of the Transaction
The deal sees VICI Properties acquiring the real estate assets while Century Casinos retains operational control. After accounting for various expenses, including the purchase of the Century Downs land, selling expenses, and taxes, Century Casinos retained approximately $113.2 million of the purchase price.
The lease term will also be extended, ensuring a full 15-year initial base lease term, with four five-year renewal options.
The co-CEOS of Century Casinos, Erwin Haitzmann and Peter Hoetzinger, expressed their satisfaction with the deal.
“We are pleased to extend our good partnership with VICI to our Canada portfolio,” they said in a press release.
“This transaction provides us with the ability to pay down our debt and with greater financial flexibility as we continue to grow.”
Century Casinos’ Recent Performance
The backdrop to this deal is Century Casinos’ impressive financial performance in the first half of 2023
The company recently reported record revenues of $136.8 million for the second quarter of 2023, marking a 23% increase compared to the same period in the previous year.
A significant contributor to this growth has been the company’s $100 million acquisition of Nugget Casino in Reno, Nevada, which has consistently shown robust growth.
However, it’s not all been smooth sailing. While the revenue figures look good, the company’s earnings before interest, tax, depreciation, and amortization (EBITDA) saw a slight dip.
This decline is primarily attributed to operational adjustments and expenses related to the Nugget Casino acquisition.
The company’s purchase of the underperforming Maryland brick & mortar casino, Rocky Gap Casino Resort, may also prove challenging in the future. However, the company remains optimistic about its growth prospects.
With a healthy balance sheet, bolstered by the finalized $167 million from the sale of land under its Canadian casinos to VICI Properties, Century Casinos is in a strong position. The company plans to use this capital to reduce its outstanding debt, which stood at $364 million as of June 30, and to invest in its new Nevada brick & mortar casino acquisition.