JACK Entertainment announced Friday that it has completed the sale of its JACK Cincinnati casino for $ 745 million. It is a two-part sale: VICI Properties acquired a JACK subsidiary that owns the casino’s land and real estate, and Hard Rock International will operate the property.
Buy and rent
The portion of the sale price paid by VICI Properties was $ 558 million in cash. VICI then signed a triple net lease with Hard Rock under which Hard Rock will pay $ 42.75 million in rent per year for 15 years. After the initial contract period has expired, Hard Rock can be renewed up to four times for five years. In the case of triple net leasing, the tenant (Hard Rock) pays not only the rent but also the building maintenance, property tax and insurance.
It may sound strange to Hard Rock, but if you cover those expenses, the total cost per year combined with the rent is likely less than what VICI would have charged without the rent. And Hard Rock will run the property and make money on it as if it were theirs. While VICI may not receive as much rent as it could if it covered the additional costs, it does receive a stable source of income for a quarter of a century.
Hard Rock acquired the casino’s gaming assets for $ 187 million, bringing the total payment to JACK Entertainment to the aforementioned $ 745 million.
Executives rave about it
“We are pleased to officially welcome Hard Rock International and its world-renowned brand to Queen City,” said Mark Dunkeson, Chief Executive Officer of JACK Entertainment, in a press release. “After ten years and hundreds of millions of dollars in investing in developing the JACK Cincinnati Casino from the ground up, we are confident that the property’s success will continue as Hard Rock International takes it to the next level of growth.”
Dunkeson also thanked the casino staff for their hard work, adding, “We know they will continue to thrive under the leadership of Hard Rock International as they are known for their excellent culture.”
In addition to years of cash flow, VICI President and COO John Payne was delighted with the transaction, saying that the company “is diversifying our geographic footprint by acquiring one of only four fully licensed casino properties in the state of Ohio that will continue to operate “. to be one of the healthiest and fastest growing regional gaming markets in the whole country. “
JACK and VICI have a story
This is the second transaction between JACK Entertainment and VICI Properties to close this year as JACK Entertainment is reducing its presence in the gaming industry. In May, she completed the sale of the Greektown Casino Hotel, one of three casinos in Detroit. The deal was announced in November 2018.
On that sale, VICI Properties bought the land and property for $ 700 million, while Penn National Gaming acquired the operation of the Greektown Casino hotel for $ 300 million, bringing the total contract to $ 1 billion.
As with the acquisition of JACK Cincinnati, VICI has signed a triple net lease with Penn National. The lease timeframe and extension options are the same with an annual rent of $ 55.6 million.