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November 30, 2017

Caesars’ Harrah’s Sale to Move New Vegas Convention Center Forward




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Caesars Entertainment Corporation is planning a new 300,000 square foot convention center in Las Vegas

The company reports it has reached definitive agreements to sell and leaseback the real estate assets associated with Harrah’s Las Vegas to VICI Properties (VICI). As part of the deal, Caesars will acquire 18.4 acres of adjacent land from VICI to develop a planned new 300,000 square foot convention center, as well as $1.14 billion in cash for the Harrah’s real estate. 

Caesars said that the new convention center facility, which is surrounded by Caesars Entertainment properties, is expected to have the largest column-free ballroom in the United States and to be outfitted with state-of-the-art technology. The space will be flexible enough to accommodate meetings of many different sizes. 

The proceeds of the Harrah’s sale will be the primary source of funds for a previously announced purchase of Centaur Holdings, LLC, Caesars said. 

Caesars will continue to operate Harrah's Las Vegas, including gaming, hotel operations and all other amenities. The property will remain a part of the Caesars Entertainment network and continue to benefit from the Harrah's brand, the Total Rewards loyalty network and access to centralized services. As part of the sale and leaseback transaction, Caesars and VICI will enter into a 15-year lease for Harrah's Las Vegas under which Caesars will pay initial annual rent of $87.4 million. The rent will increase contractually in subsequent years. Caesars will have the option to extend the lease for an additional 20 years via four five-year extensions. VICI has secured committed financing to fund the purchase.

In a written release, Mark Frissora, president and CEO of Caesars of Entertainment, said that the deal would allow the company to acquire Centaur and develop the convention center without increasing leverage. 

The parties have negotiated for limited purchase rights with respect to the planned convention center upon completion. Caesars will have the right to require VICI to purchase the convention center and lease it back to Caesars, and in the event Caesars does not exercise its put right, VICI will have an option to acquire the convention center and lease it back to Caesars. 


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