Eldorado, Caesars to Mortgage Convention Center for $400M
The deal with casino REIT VICI Properties is conditioned on the completion of the $17.5 million merger between Eldorado and Caesars. It also includes the sale of 23 acres of land near the Las Vegas Strip for an additional $103.5 million.
Eldorado Resorts Inc. has been extremely busy this month as Nevada casinos reopened and as it nears the closing of its $17.5 billion merger with Caesars Entertainment Corp.
Eldorado announced a public offering of 18 million shares of stock on Tuesday and said Wednesday it will issue $5 billion in bonds. It’s also gotten creative with real estate to raise additional cash.
VICI Properties Inc., the casino REIT spun off by Caesers Entertainment Operating Co. during bankruptcy proceedings in 2017, has agreed to loan Eldorado $400 million secured by the recently reopened Caesars Forum Convention Center in Las Vegas. The five-year mortgage will bear interest at a rate of 7.7% subject to a 2% annual escalation and will be pre-payable beginning in year 3 subject to certain conditions.
Additionally, VICI agreed to acquire approximately 23 acres of undeveloped land near the center of the Las Vegas Strip for $103.5 million.
The mortgage and the acquisition of the land parcels are pursuant to a non-binding letter of intent between Eldorado and VICI. The closing of the transactions is conditioned upon the completion of the Eldorado-Caesars merger.
The coronavirus pandemic has slowed down the merger, which has been in the works for nearly a year and was originally slated to close in April. More recently the companies had hoped to have Federal Trade Commission approval by the end of June, but the Las Vegas Review Journal reported that it could take a while longer. The merger is also pending state approvals in Indiana, Nevada and New Jersey.
“We are pleased to further our relationship with VICI through these transactions,” Eldorado Tom Reeg said in a written statement. “The combination of these two transactions will serve to strengthen our balance sheet and provide added liquidity.”
Eldorado operates 23 properties in 11 states, including Eldorado resorts in Nevada and Louisiana; Tropicana properties in New Jersey, Nevada and Indiana; and Isle of Capri or Isle properties in Louisiana, Florida, Colorado, Missouri, Iowa and Mississippi.
Caesar’s Entertainment operates primarily under the Caesar’s, Harrah’s and Horeshoe brands, stretching around the globe as far as Dubai. Eldorado is expected to change its name to Caesars Entertainment following the merger.