The ownership of the Rio Hotel & Casino in Las Vegas passed the first step toward taking over operations from Caesars Entertainment on Oct. 1. The Rio will undergo a $338 million renovation starting in August.
The Nevada Gaming Control Board on Wednesday signed off on the issuance of a gaming license to the New York-based Dreamscape Companies and its executive team, headed by founder and President Eric Birnbaum. The Nevada Gaming Commission will have the final vote on July 27.
Birnbaum went through a preliminary suitability application before the Board in January 2021 and no issues of concern were found then or on Wednesday.
In December 2019, Dreamscape acquired the 2,522-room Rio from Caesars Entertainment for $516.3 million. Caesars continued to operate under a four-year leaseback agreement that expires at the end of 2023.
“Thankfully, someone was looking over us, because three months later, we all experienced COVID,” Birnbaum said. “The way we had structured the deal was a sales leaseback and a triple-net lease with Caesars, where they were paying us rent, while we put together our business plan. COVID allowed us to implement our business plan and hire individuals to steer the ship and get ourselves in the position we’re currently in today.”
The Rio, which opened in 1990, features 220,000 square feet of convention and meeting space, a five-acre pool area, and 150,000 square feet of casino space with more than 60 tables and 1,000 slots. It draws local residents to the property, in addition to attracting regional tourists.
Dreamscape announced in February it had completed raising $850 million in capital to help execute a massive renovation. The capital raised will launch two independent Dreamscape platforms: Dreamscape Entertainment Properties, Inc., an experiential real estate investment trust that will own gaming, hospitality, and entertainment assets, and Dreamscape Entertainment Integrated Resorts, Inc., an operator of gaming, hospitality, and entertainment assets.
“The primary repositioning and use of the proceeds to take our asset from point A to B is a $338 million property-improvement plan,” Birnbaum said. “Putting $350 million into the property will be in two phases. All of the rooms and suites in the Ipanema Tower will be renovated. The check-in experience will be redesigned, along with revamping the pool area, which is about 150,000 square feet. We’ll also refresh the casino and a host of our food and beverage venues.”
The first phase of the $350 million will take about 18 months to complete and the property will remain open and operating, Birnbaum said.
“Next month, we start in earnest to renovate the rooms,” Birnbaum said. “We will take a floor or two offline, renovate the rooms, and continue to work our way down as the property continues to operate. In addition, we will be taking some of the food and beverage venues offline, renovating those and putting them back online. We thought, instead of shutting the entire property down and doing it all at once, since the property is doing quite well, it would make sense to do it in a phased-in approach.”
In 18 months, Birnbaum said they plan to complete the 1,500-room renovations, six or seven food and beverage operations, the entire casino floor, and the pool deck. The Rio will also modernize its 250,000-square-foot convention space.
The second phase will involve the renovation of the 1,000- room Masquerade Tower. There are plans to upgrade five or six food and beverage outlets as well, Birnbaum said.
The Rio’s famed Carnival World Buffet will not return.
Trevor Scherrer has been named president of gaming and entertainment. Other executives include Janice Fitzpatrick as chief financial officer, Tom Evans as chief marketing officer, Kevin Sweet as chief gaming officer, and Don Purdue, vice president of development and construction.
The new independent Dreamscape platforms will focus on investing and operating in strategically located, high-barrier-to-entry markets with asymmetric growth potential, Birnbaum said. The success of their capital raise demonstrates Dreamscape’s commitment to diversifying its capabilities and deepening its presence in key markets throughout the U.S.
These newly capitalized platforms, coupled with the upcoming renovation of the Rio, will provide Dreamscape with a foundation to scale within the entertainment and gaming sectors, Birnbaum said.
The company already has a broad presence and geographically diverse portfolio, owning and operating assets in Nashville, Miami, New York City, Los Angeles, Phoenix, New Orleans, Charleston, and Philadelphia.
Dreamscape has deployed in excess of $35 billion across residential, retail, hospitality, entertainment, and gaming properties. The team has worked on a diverse portfolio of properties, including Henry Hall in New York’s Hudson Yards, the Pod Hotel in New York’s Times Square, the Goodtime Hotel in South Beach, and 5420 Sunset Boulevard in Hollywood.
