Harrah’s Reno, one of the Nevada gaming industry’s historic landmarks, has been sold to an investment group that will convert the aging hotel-casino into a non-gaming hotel and mixed-use development.
In a statement Wednesday, an affiliate of CAI Investments will pay $50 million to real estate investment trust VICI Properties and operator Caesars Entertainment for the 83-year-old building in downtown Reno. The story was first reported by the Nevada Independent on Tuesday.
Caesars will continue to operate the 940-room hotel-casino after the transaction closes through a short-term lease with CAI. The property is expected to close in the second half of 2020, ending the presence the Harrah’s name in the Northern Nevada city.
“We recognize the long legacy of Harrah’s in Reno, where the (Harrah’s) brand began and our role in the community,” Caesars CEO Tony Rodio said in a statement. “We are pleased the buyer is committed to the community and supports the redevelopment of this wonderful asset.”
Rodio said Caesars has worked with CAI “to provide a reasonable closure plan that allows our great staff in Reno ample time to secure their next jobs, including priority consideration for relevant openings at our other properties in Nevada, including Lake Tahoe and Las Vegas,”
Caesars is merging with Reno-based Eldorado Resorts in a $17.3 billion transaction. Eldorado operates three casinos in downtown Reno – Eldorado, Silver Legacy and Circus Circus, which are collectively referred to as “The Row.”
Gaming analysts said Eldorado management, which would have acquired the Harrah’s Reno lease through the Caesars purchase, wasn’t interested in operating a fourth casino in the Reno market. In addition, there might have been federal antitrust concerns with one company owning that many gaming properties in the area.
CAI Investments CEO Christopher Beavor said he is originally from the Reno/Sparks community in Northern Nevada and “it is with great pride that we are investing in the Reno area by redeveloping this property.”
The Gaming Control Board has lengthy procedures policy for casino closures and changeovers, including shutting down gaming pits and slot machines, inventorying and destroying casino chips and tokens, and paying out in-house progressive jackpots.
The agreement with CAI allows for Caesars to retain its guest data and places no restrictions on Caesars’ marketing activities. Harrah’s Reno will continue to be part of the Caesars Rewards network during the short-term lease.
Harrah’s Reno has a 40,000-square-foot casino with table games and 700 slot machines. The property has six restaurants, including Harrah’s Steak House, the first restaurant in Northern Nevada to be elected into the Fine Dining Hall of Fame.
Harrah’s Reno, which opened in 1937, was the original casino in the Harrah’s chain that was founded by William F. “Bill” Harrah. Currently, there are 17 Harrah’s-branded casinos in 11 states, including four in Nevada – Reno, Lake Tahoe, Las Vegas, and Laughlin.
The property began as a small bingo parlor and casino. Over time, Harrah acquired other casinos and land parcels to expand his flagship resort. In 1968, he began construction on a 24-story high-rise that opened a year later. In 1981, a 100-room tower was added to Harrah’s Reno by its then owner, the Holiday Inn Corp.
New York-based VICI leases the property to Caesars Entertainment. VICI was created out of the Caesars bankruptcy in 2017 and took ownership of nearly two dozen Caesars-owned casinos.
The proceeds of the transaction shall be split 75% to VICI and 25% to Caesars, while annual rent payments under between Caesars and VICI will remain unchanged.
“This disposition will allow VICI to optimize the quality of our real estate portfolio and redeploy the proceeds toward other attractive growth opportunities,” VICI President John Payne said in a statement. “The sale of Harrah’s Reno demonstrates our ability to continuously work constructively with our tenants to improve our individual businesses.”
CAI, which finances, develops and manages properties, is currently constructing an upscale hotel and office mix use project in Reno. It will mark Reno’s first 4-star hotel.
Beavor said CAI is working with Gryphon Private Wealth Management (GPWM) as capital partners for the project. GPWM Opportunity Zone Funds will be investing the required capital for the project.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
