Caesars mortgages its future with Harrah’s Las Vegas dirt sale


Casino operator Caesars Entertainment Corporation (CEC) has sold the ground underneath its Harrah’s Las Vegas casino to help fund its purchase of two Indiana casinos.
On Thursday, CEC announced that it had inked a deal with VICI Properties to sell and leaseback the land underneath Harrah’s Las Vegas. CEC will receive $1.14b from the sale, while the initial year of the 15-year lease will cost CEC $87.4m in rent. CEC has an option to extend the lease by another 20 years via four five-year extensions.
CEC also announced that it has agreed to acquire 18.4 acres of Harrah’s-adjacent land from VICI to develop a new 300k-square-foot convention center. CEC will have the right to compel VICI to buy the completed convention center and lease it back to CEC. Should CEC choose not to exercise this right, VICI can choose to buy the building and lease it back to CEC. (So basically, expect VICI to be buying the damn building.)
CEC CEO Mark Frissora said the transactions “demonstrate our commitment to pursuing growth opportunities while maintaining balance-sheet discipline.” Although, one might say that the real discipline will be coming via CEC’s looming 2020 debt götterdämmerung.
VICI is the real estate investment trust (REIT) that was formed via the tortured restructuring of CEC’s bankrupt main unit, Caesars Entertainment Operation Co (CEOC), to own the land under which CEOC’s casinos stand and provide CEC with some desperately needed ready cash. But it’s clear CEC intends to sell off more of its dirt as the situation warrants.
Clearly, CEC execs never tired of the shell game they played over the past four years or so, shifting assets out of this division into another division, then moving them back where they were, then assigning new acronyms to each division to perpetuate the illusion of growth and stability.
At any rate, CEC says it plans to use the proceeds of its Harrah’s dirt deal to help fund the $1.7b deal it struck earlier this month to purchase two Centaur Gaming casinos in Indiana. The remaining half-a-billion or so will likely come from selling the earth underneath those venues, or perhaps CEC will eventually figure out a way to sell the sky above them. (The acronym for Sky High Investment Trust seems apropos.)
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