LAS VEGAS — VICI Properties has acquired the 23-story Octavius Tower at Caesars Palace Las Vegas for $507.5 million in cash.
Under the terms of an existing ground lease, the REIT will lease the 668-room hotel back to the seller, Caesars Entertainment Corp., which currently operates the property. Caesars’ annual rent payment to VICI will be $35 million.
Constructed in 2012, the hotel spans 1.2 million square feet and is located on the Flamingo Avenue side of Caesars Palace Las Vegas.
At the time of closing, VICI announced that it will also acquire Harrah’s Philadelphia from Caesars. The original purchase price of $241.5 million will be reduced to $82.5 million to reflect modifications to VICI’s existing leases with Caesars.
“These agreements with VICI unlock more than $500 million in value from our real estate assets to support value-adding growth opportunities and reduce the volatility of our future rent payments, demonstrating our commitment to create value for our shareholders while maintaining financial discipline,” says Mark Frissora, president and CEO of Caesars Entertainment.
Constructed in 2006, Harrah’s Philadelphia underwent a renovation in 2017. The property spans 2 million square feet and includes 2,450 slot machines, live table games, and several bars, restaurants and parking garages.
The annual lease payment for Harrah’s Philadelphia will be $21 million in the first year after close and will be subject to contractual annual increases thereafter. The transaction is expected to close in the fourth quarter.
VICI Properties was spun off from Caesars Entertainment Operating Co. Inc., a subsidiary of Caesars Entertainment, in fall 2017. The REIT’s national portfolio includes 20 gaming facilities comprising more than 37 million square feet, roughly 15,000 hotel rooms and more than 150 restaurants, bars and nightclubs. Its properties are leased to brands such as Caesars, Horseshoe, Harrah’s and Bally’s. VICI Properties also owns four golf courses and 34 acres of undeveloped land adjacent to the Las Vegas Strip.
— Camren Skelton