The CFO of VICI Properties, the real estate investment trust that owns the Mirage and nine other properties on the Strip, said the construction of a guitar-shaped hotel tower and multi-million-dollar improvements by new owner Hard Rock International will have spin-off benefits for other casinos up and down Las Vegas Boulevard.
Speaking Monday during Preview Las Vegas, the Las Vegas Chamber of Commerce’s annual forecasting event, CFO and Executive Vice President David Kieske touted December’s takeover of the Mirage’s gaming operations by Hard Rock from MGM Resorts. He was interviewed by Las Vegas Convention and Visitors Authority CEO Steve Hill.
VICI owns one of the world’s largest portfolios of gaming, hospitality, and entertainment destinations, including Caesars Palace, MGM Grand, the Mirage and the Venetian.
“Take the Mirage, where we own the real estate, and Hard Rock’s renderings of the guitar tower,” Kieske said. “We’re very excited about that, because that’s a chance for us to invest incremental capital and frankly bring up the quality of the neighborhood by having a marquee Hard Rock on the Strip. That’s always good for the surrounding assets and operators, because that in itself will be a draw.”
Under terms of the deal, Hard Rock paid MGM $1.075 billion in cash for the operating assets of the Mirage. It also entered into a long-term lease agreement with VICI for a base rent of $90 million a year.
The 3,044-room casino-resort will continue to operate as the Mirage Hotel & Casino until the renovation and rebranding of the property to the Hard Rock Hotel & Casino Las Vegas are complete.
The existing 3,000 rooms will grow to more than 3,600 when the guitar tower is added. The guitar will be similar to the one at the Seminole Hard Rock Hotel Hotel & Casino in Hollywood in south Florida and replace a volcano built by casino mogul Steve Wynn, who opened the property in 1989.
The new Hard Rock will grow by 80,000 square feet to 174,000, including the 94,000-square-foot casino. Slot machines will increase from 836 to 2,000, while table games will go from 51 to 212. The existing casino and hotel rooms will be gutted and rebuilt. There are no plans for any closure, but Hard Rock hasn’t detailed how construction will take place while the property is open.
“It would be very difficult for the Hard Rock to say we would like to tear down the Mirage,” Kieske said in explaining relationships between REITs and their tenants. “If they want to do that, they’re legally obligated to pay us the same amount of rent. Some changes to the Mirage are coming, like taking out the volcano, that we will let them do and will give us the ability to put capital into the Strip.”
Of the 38 properties on the Strip totaling 106,000 hotel rooms, VICI owns 10, with 45,000 rooms. The company also made a recent investment in the Fontainebleau Las Vegas that will open by the end of 2023.
“Part of the reason we love Las Vegas is the economic vitality,” Kieske said. “The Strip is 4.2 miles long. It’s the most economically productive strip in the world. No other road in America can replicate or showcase what goes on the Strip. It’s $7.5 billion of gross gaming revenue and $42 billion of spend. These operators run and own critical infrastructure projects. Caesars Palace has been around since 1966. While there are some ebbs and flows in real estate over the years, the boxes have stayed there, because the operators continue to reinvent themselves by spending money, building attractions, and putting in new draws to the asset.”