Hard Rock International isn’t giving up on Ohio.
The casino operator, which is controlled by Florida’s Seminole Indian Tribe, announced a deal Friday with real estate investment trust VICI Properties to acquire Jack Casino Cincinnati for a combined $745 million.
The property will be renamed Hard Rock Casino Cincinnati.
VICI will pay $558 million for the land and real estate associated with Jack Cincinnati, and Hard Rock will purchase the operating assets for $187 million. When the deal closes, Hard Rock will pay VICI total annual rent of $42.75 million over a 15-year term, with four 5-year renewal options.
Jack Casino Cincinnati generates $197.6 million annually in gaming revenue, according to the Ohio Casino Control Commission. SunTrust gaming analyst Barry Jonas the casino’s gaming revenues increased 3 percent last year and are up 5 percent so far in 2019.
“Regional gaming revenues have grown healthily in the Ohio market given solid macroeconomic trends,” Jonas said. “We believe the market should continue to benefit from solid top-line fundamentals and limited supply.”
Hard Rock was Ohio’s top revenue producing casino operator through its ownership of the Hard Rock Rocksino in the Cleveland suburb of Northfield Park. The property was sold last year to MGM Resorts International and MGM Growth Properties and has been renamed MGM Northfield Park.
“Hard Rock has been the number one operator in Ohio since opening in the greater Cleveland market in 2013,” Hard Rock Chairman and CEO Jim Allen said in a statement. “We look forward to introducing our unique brand of casino entertainment to Cincinnati.”
The Seminole Tribe acquired Hard Rock International in 2007 for just under $1 billion. Last year, the tribe acquired the Trump Taj Mahal in Atlantic City and rebranded the Boardwalk casino as a Hard Rock, the tribe’s 11th casino.
Jack Casino Cincinnati opened in 2013 as the Horseshoe Cincinnati – a partnership between Caesars Entertainment and businessman Dan Gilbert. The casino, which does not have a hotel, occupies 22 acres in downtown Cincinnati.
The property is one of just four stand-alone casinos in Ohio that can operate full-scale gaming. Seven racetrack casinos are slot machine-only.
Gilbert, who owns the NBA’s Cleveland Cavaliers, bought out Caesars’ interest in the property, along with the interest in the Horseshoe Cleveland, and renamed the casinos under his Jack Entertainment brand. Last year, Gilbert said he wanted to sell his gaming holdings. Gilbert still owns Jack Cleveland and Jack Thistledown Racino in Ohio.
The deal is the second transaction VICI has made for a Jack Entertainment casino. In November, the company and Penn National Gaming announced plans to purchase Greektown in Detroit for $1 billion. That transaction is still pending regulatory approval.
VICI President John Payne said the deal extends the REIT’s footprint into Ohio. The company currently owns 22 gaming properties in the U.S., 21 of which are operated by Caesars. VICI was created through Caesars’ bankruptcy reorganization that was completed in October 2017. VICI owns the Margaritaville Casino in Bossier City, Louisiana, which is operated by Penn National.
“This transaction expands our geographic footprint into one of the fastest growing regional markets,” Payne said. “The property is poised to benefit from the introduction of Hard Rock, a dynamic and proven operator in the Ohio market. We look forward to supporting Hard Rock as they continue to execute on their growth strategy throughout the U.S. and globally.”
Deutsche Bank gaming analyst Carlo Santarelli, in a note to investors, called the transaction “a pretty straight forward deal” for VICI.
“We believe the deal accretion and the addition of an incremental operating partner in Hard Rock bodes well for the story (and) stock and should be viewed favorably by investors,” Santarelli said.
Shares of VICI, traded on the New York Stock Exchange, closed at $22.12 Friday, up 19 cents or 0.87 percent.
The transaction is subject to regulatory approvals and is expected to close in late 2019.
The Cincinnati property provides jobs for 1,000 workers. The casino has 100,000 square feet of gaming space that houses 1,800 slot machines and 100 table games. The casino also has 33,000 square feet of meeting space, six restaurants, and two bars.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
