A deal in an empty market
Casinos around the United States may be closed and there might not be any prospects for any real sort of cash flow for the foreseeable future, but that doesn’t mean that gaming industry deals can’t still be made. Recently, Twin River Worldwide Holdings Inc. announced that it has agreed to acquire Bally’s Atlantic City Hotel & Casino from Caesars Entertainment Corporation and VICI Properties, Inc. The sale price is a mere $25 million.
VICI is a real estate trust that was spun-off from Caesars in 2017 as part of a reorganization following Caesars’ bankruptcy and owns Caesars’ casinos. In the Bally’s deal, VICI will receive $19 million and Caesars will get $6 million.
Twin River expanding its footprint
Twin River owns and manages seven casinos, including the Hard Rock Hotel & Casino in Biloxi, Mississippi and the Dover Downs Hotel & Casino in Dover, Delaware. It also announced an agreement to buy the Eldorado Shreveport Resort and Casino in Shreveport, Louisiana, and the MontBleu Resort Casino & Spa in Lake Tahoe, Nevada from Eldorado Resorts.
The sale of Bally’s Atlantic City is expected to close late this year or early next year. In the meantime, the casino will still be a part of the Caesars Rewards network.
Caesars, VICI rebalancing
“We look forward to the reopening of Bally’s Atlantic City as soon as appropriate once the public health emergency related to COVID-19 has passed,” said Caesars CEO Tony Rodio in a press release. “We appreciate Twin River’s commitment to this property, which has a great future ahead under its stewardship.”
One would assume that Bally’s Atlantic City will reopen before the sale is completed, especially as the federal government and states all of a sudden seem to be in a massive hurry to “return to normal,” but even if it does, it would be hard to imagine a casino in New Jersey being packed with gamblers while the coronavirus is still infecting people. Then again, seeing images of people currently behaving like there isn’t a deadly virus going around, who knows?
“This transaction allows us to maintain the existing financial terms of our master lease with Caesars and helps balance our geographic diversification as we work to complete the acquisition of Harrah’s Resort Atlantic City,” said John Payne, president and COO of VICI Properties.
Once the sale is completed, Caesars will still operate Caesars Atlantic City, including the Wild West casino area and The Book sportsbook, as well as Harrah’s Resort Atlantic City. VICI will also continue to own the actual properties including the land and real estate.
VICI leases the casinos back to Caesars in these relationships. It benefits VICI because it can maintain a strong real estate portfolio and earn predictable annual income from the leases. Caesars is able to continue to operate and make money off of the hotels and casinos while not having to shell out expenses for maintenance, insurance, and property taxes.
