VICI to Provide Mortgage Loan on Caesars Forum, Eldorado Sells Shares ahead of Merger

Real estate investment trust VICI Properties has agreed to provide a $400 million mortgage loan on the Caesars Forum conference center in Las Vegas, news emerged this past Monday.

The loan will bear interest rate of 7.7% with payments subject to 2% escalation per year. It will have a term of five years pre-payable beginning in year three subject to conditions.

Caesars Forum is a 550,000-square-foot conference center that features 300,000 square feet of flexible meeting space and the world’s two largest pillarless ballrooms. The property is set to open doors later this year. It is located with direct access to more than 8,500 hotel rooms at Harrah’s Las Vegas, the LINQ, and the Flamingo.

Caesars Forum will remain subject to the existing put/call agreement between Caesars Entertainment Corp. and VICI, with certain modifications, including the REIT’s call option accelerating to 2025.

VICI is the real estate investment trust that was spun off from Caesars in the fall of 2017 after the Las Vegas casino and hospitality company emerged from a lengthy and complex bankruptcy.

VICI to Buy Adjacent Land

In addition, VICI announced Monday that it would purchase approximately 23 acres of undeveloped land adjacent to Caesars Forum for a price of $4.5 million per acre for a total of $103.5 million.

The REIT already owns 27 acres of adjacent land and after the acquisition, it will have control of 50 acres of land near Harrah’s Las Vegas, the LINQ, the Flamingo, Bally’s Las Vegas, Paris, Planet Hollywood, and The High Roller skyride attraction that annually draws 1.5 million visitors. In addition, the land VICI would own is adjacent to the Las Vegas Monorail, which annually carries around 4.6 million passengers.

VICI said Monday that the agreed loan and the acquisition of land are pursuant to a non-binding letter of intent with casino operator Eldorado Resorts and the closing of the deals is conditioned upon the planned merger of Eldorado and Caesars and is subject to completion of due diligence, negotiation of definitive documentation, and other customary closing conditions.

VICI’s CEO Ed Pitoniak said that the investments demonstrate VICI’s “strong conviction in Caesars’ market leadership” and that the transactions “will produce immediate economic benefits for VICI’s stockholders and incremental liquidity for the combined Caesars/Eldorado.”

Eldorado Issues Shares to Strengthen Finances ahead of Merger

Separately, Eldorado announced Monday that it would issue new shares to strengthen its finances ahead of its $17.3 billion tie-up with Caesars.

The Reno, Nevada-based company said that it would offer 20.7 million shares and would use the proceeds from their sale for general corporate purposes. At Monday closing price of $38.44, the sale could generate around $800 million.

Caesars and Eldorado still need approvals from the Federal Trade Commission and gambling regulators in New Jersey, Indiana, and Nevada in order to close their merger. The Indiana Gaming Commission will reportedly weigh in on the deal in July.

The Federal Trade Commission is expected to rule on it by the end of the month. According to analysts, Nevada and New Jersey regulators will wait for federal approval to be issued before giving their blessings to the deal.

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