Century Casinos (NASDAQ: CNTY) introduced Wednesday that it’ll promote the actual property property of its Canadian gaming quartet to VICI Properties (NYSE: VICI) for $164.4 million, based mostly on change charges on Could 16. .
The Colorado-based regional on line casino operator plans to lease these venues again from an actual property funding belief. Gaming properties acquired by VICI are Century On line casino & Resort Edmonton, Century On line casino St. Albert, Century Mile Racetrack & On line casino in Edmonton, Alberta, and Century Downs Racetrack & On line casino in Calgary, Alberta.
After deducting charges, taxes and different fees, Century estimates web revenue of $114.6 million from the transaction, which is anticipated to shut within the second half of this yr.
Concurrent with the closing of the transaction, Century Canadian Portfolio will likely be added to the present triple-net grasp lease settlement between VICI’s subsidiaries and associates, leading to an annual hire improve of $12.8 million, representing an implied buy capital of seven.8%. equal to conversion charge. in response to an announcement issued by the on line casino operator.
The preliminary lease time period is 15 years with 4 five-year renewal choices.
Century and VICI Develop Relationship
Century and VICI, the biggest on line casino REIT, have a longstanding relationship. Final August, the businesses partnered to accumulate the Rocky Hole on line casino resort in Flinstone, Maryland from Golden Leisure (NASDAQ: GDEN) for $260 million in money. Century bought the working rights and VICI bought the actual property.
VICI additionally offered Century with financing to assist Century renovate two gaming venues in Missouri. VICI additionally owns the properties of Century-operated Mountaineer on line casino, racetrack and resort in New Cumberland, West Virginia.
Century has been lively in efforts to extract worth from Canadian property. The corporate offered the eponymous venue property in Calgary in January 2022 for $6.5 million. Analysts see the deal introduced as we speak as a win-win.
“General, we see this transaction and the following capital injection as incrementally constructive for CNTY, as the corporate’s share value is presently buying and selling at lower than 5 occasions our 2024 EBITDAR forecast, We do not suppose we’re getting the suitable company-wide worth for Canadian actual property,” stated Macquarie analysts. In a notice to his clients, Chad Beynon stated: “For VICI, this transaction underscores the corporate’s willingness and talent to discover and execute worldwide transactions, making this transaction its third worldwide funding.”
Makes use of of Century Earnings
The $114.6 million is a large chunk of Century’s $205.67 million market capitalization, and whereas the corporate has a historical past of acquisitions, it seems it has different plans for the proceeds from its Canadian actual property sale. is.
Which means that the operator will use a portion of its capital to pay down debt and, in some instances, return money to buyers via share buybacks and particular dividends. A portion of the proceeds may very well be used to strengthen Nugget Sparks, Century’s solely on line casino resort in Nevada.
Macquarie’s Beynon has rated the inventory’s $12 value goal as “outperforming,” suggesting a major upside from its Could 16 closing value of $6.64.
