VICI Places $103M Deal for Strip Land on the Backburner

VICI Properties, the real estate investment trust spun off Caesars, decided not to pursue for now a previously announced deal for the purchase of 23 acres of undeveloped land parcels on the east side of the Las Vegas Strip. The $103.5 million deal was agreed as part of a $500 million combined deal with Eldorado Resorts in June, ahead of the completion of its merger with Caesars Entertainment.

The 23-acre parcel adjacent to the Caesars Forum and behind Harrah’s Las Vegas, the Linq Resort and Flamingo Las Vegas, is important to VICI as it is adjacent to another one, 27 acres, which the real estate trust already owns.

Land Purchase Set Aside For Now

Both parcels combined would create a clean 50-acre slate of land for potential development, and the acquisition of the land parcel would create “an unrivaled opportunity, over time, to partner with world-class developers and operators in creating the next great Las Vegas place—a multi-property, multi-dimensional experience”, CEO Ed Pitoniak pointed out by the time VICI agreed to the mortgage deal with Eldorado.

During the company’s third quarter earnings conference call, it turned out the land had entitlement and permitting issues which would be hard to unwind quickly. Since Caesars is still dealing with integration issues around its $17.3 billion merger deal, VICI decided to put the land purchase on the backburner, and probably return to it later on, “when the dust has settled a bit post-merger”, Ed Pitoniak further clarified.

Third Quarter Earnings

VICI Properties posted 52.6% increase year-on-year of total revenues for the third quarter, to $339.7 million from the $222.5 million in Q3 2019, announced net income attributable to common stockholders of $398.3 million, or $0.74 per share, and declared a quarterly cash dividend of $0.33 per share, up 10.9% compared to the third quarter in 2019.

“In the third quarter VICI’s investors — both equity and credit — were rewarded with the growth that they have endorsed and funded through our extensive acquisition and financing activities over the last 6 quarters.”

Ed Pitoniak, CEO, VICI Properties

The real estate trust completed acquisitions and investments totaling $3.7 billion, including the $3.2 billion transaction with Caesars Entertainment, the $400 million mortgage deal secured by the Caesars Forum Convention Center, and the trust’s first investment outside of gaming, an $80 million mortgage loan to Chelsea Piers New York.

VICI Properties announced that, as of September 30, it had $6.9 billion in total debt and $1.7 billion in liquidity, $1 billion available under a revolving credit facility, $20 million in short-term investments and $144 million in cash and cash equivalents.

Approximately $557 million are available in proceeds of the remaining 26.9 million shares that are subject to the June 2020 Forward Sale Agreement, under which VICI already settled 3 million of common stock to the forward purchaser in September, in exchange for $63 million.