Realty Income Corporation has entered into an agreement with Wynn Resorts Limited to purchase Encore Boston Harbor Resort and Casino for $1.7 billion. The property was built for $2.6 billion in 2019. Wynn Resorts is selling the property in a sale-leaseback transaction with an initial lease term of 30 years and annual rent growth of 1.75% for the first ten years. The deal marks Realty Income's foray into the gaming industry.

Per the terms of the sale-leaseback agreement, the rent will escalate either 1.75% or CPI, whichever is greater, following the first 10 years of the lease term. The lease includes a 30-year option to renew upon expiration.

The parties involved expect the deal to generate a 5.9% initial cap rate, and it will generate attractive risk-adjusted returns with immediate earnings accretion. The property also offers an attractive growth model with strong in-place contractual rent growth. Once the transaction is complete, Wynn is expected to represent less than 3.5% of Realty Income's annualized contractual rent.