Caesars Entertainment has sold its Las Vegas off-Strip Rio All-Suite Hotel & Casino property for $516.3 million to the New York-based Imperial Companies real estate company, according a filing with the United States Securities and Exchange Commission.
Pending regulatory approvals, the deal for the 2,500-suite hotel is expected to close by the first quarter of 2020.
Under the terms of the agreement, Caesars will continue to operate Rio for two years and pay an annualized rent of $45 million. Imperial Companies has the option to pay Caesars $7 million to extend the lease under similar terms for a third year.
The Rio will continue to be part of the Caesars Rewards network during the lease term.
“This deal allows Caesars Entertainment to focus our resources on strengthening our attractive portfolio of recently renovated Strip properties, and is expected to result in incremental [earnings before interest, tax, depreciation and amortization] at those properties,” said Tony Rodio, CEO of Caesars Entertainment. The retention of the World Series of Poker and retention of Caesars Rewards customers are all factors that make this a valuable transaction for Caesars.
Caesars may move the World Series of Poker tournament to its new Caesars Forum conference center after it opens 2020.
Caesars, which owns nine properties in Las Vegas, is currently being purchased by Reno-based Eldorado Resorts for $17.3 billion.
That transaction is also expected to close by the first quarter of 2020. The Caesars-Eldorado deal will result in the creation of the largest U.S. casino operator by venue count.
Eldorado operates 26 properties in 12 states: Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, Ohio and West Virginia.
How the Caesars-Eldorado Deal Might Affect Planners
The strategic rationale for pursuing the combination of Eldorado and Caesars, which will operate under the “new” Caesars brand, includes:
- A more diversified domestic footprint and scale in the gaming marketplace, with about 60 owned, operated and managed casino resorts across 16 states.
- Widespread access to recognized brands and new gaming opportunities.
The merger could potentially give planners who already book their meetings at Eldorado or Caesars-owned properties access to a wider network of venues.
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