Caesars sells Harrah’s Las Vegas to VICI REIT for $1.14b

VICI Properties has plans to acquire and lease back the land and real property improvements associated with the iconic Harrah’s Las Vegas Hotel and Casino, located in Las Vegas, for $1.14 billion.

The seller was an affiliate of Caesars Entertainment Corp.

Harrah’s Las Vegas is a marquee property centrally located on the Las Vegas Strip. The property comprises 4.1 million square feet and contains 90,600 square feet of casino space and 2,530 hotel rooms. The property features a Mardi Gras and carnival theme, with 16 restaurants and bars, retail shopping, spa services, a parking garage, and 24,000 square feet of meeting space.

After closing, a subsidiary of Caesars will lease from VICI Properties the real estate associated with Harrah’s Las Vegas under a 15-year triple-net lease agreement that will have four subsequent five-year renewal periods at the tenant’s option. The tenant’s obligations under the Harrah’s Las Vegas lease would be guaranteed by Caesars Resort Collection LLC.

Simultaneously, VICI Properties entered into a definitive agreement with Caesars to sell approximately 18.4 acres of undeveloped land located behind the LINQ Hotel & Casino and Harrah’s Las Vegas for $73.6 million. The transactions are conditional on each other and are expected to be immediately accretive for VICI Properties.

Approximately 36 million visitors have traveled to Las Vegas year-to-date, a –1.4 percent change compared to 2016 statistics, according to the Las Vegas Convention and Visitors Authority. The Las Vegas Convention and Visitors Authority blamed the drop to trip cancellations and postponements following the Oct. 1 mass shooting.

Bookings plunged much further, with domestic bookings down 21 percent and international bookings down 16 percent, according to travel data analytics company ForwardKeys. And data released by the Nevada Gaming Control Board show casinos on the Strip took in almost $528.7 million from gamblers in October, approximately $34 million less than last year’s number.

Commercial real estate investment sales volume in Las Vegas during the first three quarters of 2017 reached $1.21 billion in 171 sales totaling 8.4 million square feet at an average price per square foot of $144.73. This puts 2017 on pace to be the biggest year for investment sales in a decade in terms of sales volume if it can exceed the approximately $1.4 billion spent in both 2014 and 2015, according to Colliers International. Investment sales volume growth was a negative 48.3 percent for industrial properties, 98.7 percent for office properties, 116.4 percent for single-tenant retail properties and 5 percent for shopping centers in the third quarter of 2017.

The third quarter of 2017 in Southern Nevada saw an economy that was shifting from recovery to expansion mode. Taxable sales and employment continued to increase in a Valley poised for the addition of two professional sports franchises, a major expansion of its convention center and three potential new hospitality venues on the “Strip,” concludes Colliers.