Caesars sells casino tower to VICI in nine-figure deal
Caesars Entertainment Corp. has agreed to sell the Octavius Tower at Caesars Palace to the VICI Properties real estate investment trust (REIT). The cash deal is reportedly worth over $507 million, and will result in VICI retaining ownership of the tower while, in turn, leasing it back to the casino operator. In announcing the deal, Caesars indicated that VICI will be paid $35 million a year for the Octavius lease.
It's ultimately nothing more than a paper shuffle, as VICI was created by Caesars after the casino operator emerged from Chapter 11 bankruptcy last year. VICI is the third REIT that operates in the casino industry, alongside Gaming and Leisure Properties and MGM Growth Properties.
VICI is able to pay cash for the transaction due to a hefty return earned during a recent initial public offering (IPO). The company attracted over $1.2 billion in the IPO, which it held earlier this year. VICI had anticipated selling a total of 50 million shares, but ultimately sold over 60.5 million by the time the IPO wrapped up.
VICI will also pick up Harrah's Philadelphia from Caesars later this year. Although the deal was initially expected to run $241.5 million, it was reduced to $82.5 million because of adjustments to existing leases the trust has with Caesars.
Caesars CEO Mark Frissora indicated that the money would be used to fund “value-adding growth opportunities and reduce the volatility of [their] future rent payments."