JACK Cincinnati Casino. Image courtesy JACK Entertainment
VICI Properties will soon add JACK Cincinnati Casino to its portfolio. The REIT and a subsidiary of Hard Rock International have signed commitments to acquire the downtown Cincinnati toy from Jack Entertainment for a total of $ 745 million in cash.
VICI will acquire all of JACK Cincinnati’s land and real estate assets with the purchase of 100 percent member stake in the subsidiary that owns the property for $ 558 million. Hard Rock will acquire the property’s operating assets for $ 187 million. Simultaneously with the closing of the transactions, VICI will sign a triple net lease guaranteed by Seminole Hard Rock Entertainment with an initial term of 15 years and the option of four extensions of five years each. Hard Rock has been the leading operator in the state of Buckeye since debuting in Cleveland in 2013.
“If we look at the landscape, we see numerous acquisition opportunities and would find that finding the right asset also involves finding the right business partner,” said Danny Valoy, vice president of finance for VICI, to Commercial Property Executive. “(With Hard Rock) we now have partnerships with three world-class operators that we believe will further strengthen our ability to compete for additional assets in the future.”
Subject to regulatory and state approval, the transaction is expected to close in late 2019. Goldman Sachs & Co. acted as financial advisor while Kramer Levin Naftalis & Frankel acted as legal advisor on behalf of VICI.
JACK Cincinnati first opened as Horseshoe Casino Cincinnati in 2013, developed by Rock Gaming, the former incarnation of JACK Entertainment, for $ 450 million. The 450,000-square-foot game target was re-launched as JACK Cincinnati in 2016. In addition to 100,000 square meters of gaming space, the casino offers 33,000 square meters of conference accommodation, six restaurants, two bars and an adjoining 2,500 square meter gaming area for parking.
“This transaction expands our geographic footprint into one of the fastest growing regional markets,” said John Payne, President & Chief Operating Officer of VICI, in a prepared statement. JACK Cincinnati is one of only four fully licensed casinos in the state of Ohio.
The buying game
VICI, which completed its spin-off from Caesars Entertainment Operating Co. in 2017, has been busy strengthening its national portfolio over the past few months. In January, VICI completed the acquisition of Margaritaville Resort Casino in Bossier City for $ 261 million. La VICI’s partner was Penn National Gaming, which acquired Margaritaville’s business assets in a separate transaction before entering into a lease with the REIT.
In December 2018, VICI completed acquisition and leaseback transactions valued at $ 241.5 million with Caesars Entertainment for Harrah’s Philadelphia. VICI also reached an agreement in November 2018 to add the Greektown Casino hotel in Detroit for $ 700 million, with Penn National agreeing to purchase the business assets separately.
The JACK Cincinnati deal brings VICI’s proposed and completed acquisition transactions to nearly $ 2 billion in less than six months. However, the REIT has no plans to allow the latest addition to the list to slow down its purchasing activity.
“The acquisition (JACK Cincinnati) does not affect our ability to complete or announce additional acquisitions this year as we have a strong balance sheet, relatively low leverage and efficient measures to access capital,” Valoy told CPE. “Since our inception, we have raised over $ 3 billion in equity to strengthen our balance sheet and fund acquisitions.”
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