Caesars and VICI Complete Caesars Forum $400M Mortgage Deal

Caesars Entertainment announced Friday it secured a mortgage loan deal worth $400 million with real estate investment trust (REIT) VICI Properties, and secured by the Caesars Forum Conference Center in Las Vegas.

In a filing to the Securities and Exchange Commission (SEC) VICI outlined the loan deal which was initiated by a letter of intent (LOI) signed by both parties in June, would be for 5 years and would bear a 7.7% interest rate per annum. The amount would be pre-payable in the beginning of year 3, subject to certain conditions, or even earlier in case the REIT acquires the Caesars Forum, subject to its consent.

VICI Utilized Available Cash

Located behind the Linq Promenade and High Roller Observation Wheel, the huge 500,000 square-foot conference center cost Caesars $375 million to build. VICI informed SEC that the mortgage deal with Caesars was funded by available cash.

Caesars noted that both parties, in accordance with the LOI and concurrently with the entry into the deal, amended their previously in place Put-Call Right Agreement, adding certain modifications such as an acceleration of VICI’s call option to 2025.

Ongoing Evaluation for the Sale of Land

Another amendment Caesars and VICI agreed to was the waiver of the current mortgage deal being conditioned on the sale of 23 acres of land which Caesars Entertainment owns and which VICI Properties wants to acquire. The undeveloped land parcels are located behind Harrah’s Las Vegas, Linq Resort, and Flamingo Las Vegas, adjacent to the Caesars Forum, and the potential $103.5 million transaction is subject to ongoing evaluation by both parties.

The 23 acres of land is of interest to the REIT as it is also adjacent to another 27 acres of undeveloped land located behind Bally’s Las Vegas, Paris Las Vegas, and Planet Hollywood which VICI owns. When both parcels of land are paired, it gives VICI a 50-acre slate for potential development, an unrivaled opportunity to create the next great Las Vegas place and experience, as VICI CEO Ed Pitoniak said in June.

VICI Facilitated the Merger

The REIT which was spun off Caesars almost 3 years ago played a significant role for the completion of the merger deal between Eldorado Resorts and Caesars Entertainment. VICI acquired 3 Harrah’s casinos in Atlantic City, New Orleans and Nevada and simultaneously leased back the properties’ operations back to the combined entity which kept the name of Caesars Entertainment. VICI paid $1.8 billion for the casino resorts and leased them back for $154 million annual rent.