Caesars Entertainment Corp. completed the sale of the company’s Harrah’s Philadelphia racetrack and casino to its real estate investment trust partner for $82.5 million this week.
The sale price paid by VICI Properties reflected a reduction for the value of certain lease modifications and other aspects of the transaction as part of the previously announced agreement between the two companies.
VICI originally agreed to acquire Harrah’s Philadelphia for $241.5 million, which was reduced by $159 million to reflect the aggregate net present value of the Lease Modifications, resulting in a net cash consideration of $82.5 million, excluding transaction costs.
VICI was formed from the bankruptcy reorganization of Caesars Entertainment and own more than 20 Caesars casino and resorts. The properties are leased back to Caesars, which continues to manage and operate the businesses.
“The completion of this transaction with VICI provides Caesars with financial flexibility and reduces the volatility of our future rent payments,” Caesars CEO Mark Frissora said in a statement.
Caesars leased Harrah’s Philadelphia from VICI pursuant to the existing long-term lease agreement related to other domestic properties. The property remains a part of the Caesars Entertainment network and continues to benefit from the Harrah’s brand, the Total Rewards loyalty network and access to centralized services.
In connection with the transaction, Caesars and VICI completed lease modifications to the Caesars Palace Las Vegas leases. The companies said modifications are to bring the lease terms into alignment with other market precedents and the long-term performance of the properties.
“The VICI and Caesars teams worked very productively together to complete this important and value-creating transaction for both companies,” said VICI CEO Edward Pitoniak.
The changes moderate volatility in Caesars’ rent payments to VICI while resulting in near-term increases in rent for VICI. Caesars said the modifications also create additional flexibility to facilitate Caesars’ development ambitions on the East Side of the Las Vegas Strip by removing certain impediments associated with those plans.
