Published on: January 9, 2023, 03:17 am.
Last updated: January 9, 2023, 03:30.
VICI Properties is expanding its real estate footprint north into Canada with the acquisition of four land-based casinos in Alberta.
VICI, a real estate investment trust controlled by Caesars Entertainment, announced an agreement with Pure Canadian Gaming Corporation on Monday. The deal transfers ownership of four casinos to VICI in a deal valued at US$271.9 million ($200.8 million).
VICI acquired the real estate assets of Pure Casino Edmonton, Pure Casino Yellowhead, Pure Casino Calgary and Pure Casino Lethbridge. VICI financed the transaction through a combination of cash on hand and existing line of credit.
VICI and Pure Canadian Gaming Corp. they simultaneously entered into a triple-net master lease that allows Pure to retain management and operations of the four casinos. Pure will pay VICI an initial annual rent of US$21.8 million ($16.1 million).
The 25-year lease will increase by 1.25% in years two and three. Starting in years four, rent will increase based on the Canadian Consumer Price Index or 1.5%, whichever is greater. The annual rent increase is capped at 2.5%.
Today’s announcement marks another important first for VICI as we expand our international footprint in Canada through the acquisition of the Pure portfolio,” commented John Payne, VICI’s President and Chief Operating Officer.
Pure Canadian Gaming is VICI’s 11th tenant. Other casino operators with VICI leases include Eastern Band of Cherokee Indians, Hard Rock International, Jack Entertainment, MGM Resorts and Penn Entertainment.
VICI’s first casino game outside the US gives the real estate trust a foothold in the North. The four Pure Canadian casinos represent the company’s entire portfolio.
Pure Casinos are small compared to VICI’s Las Vegas Strip holdings. Pure Lethbridge Casino measures just 43,450 square feet and comes with 450 slot machines and two dozen table games.
Pure Calgary measures 57,000 square feet with 850 slots and 40 tables. Pure Yellowhead’s 75,000 square foot gaming floor contains 800 slots and 40 tables. Pure Edmonton measures 72,000 square feet, but has the most gaming positions of the bunch, with around 875 slots and 45 table games.
Alberta is Canada’s third largest casino market after Ontario and Quebec. Alberta is unique in that the industry is based on a charitable gaming model.
The Alberta Gaming & Liquor Commission (AGLC) owns all slot machines in the province. AGLC retains 70% of gross device gaming revenue. The remaining 30% is split between the casino operator and charitable groups.
Casinos also share their table game business with charities, but the AGLC takes no cut. Food and beverage, entertainment and all other revenue is retained solely by the casino.
VICI closes MGM Grand, Mandalay Bay
It was a busy Monday for VICI Properties as the investment vehicle also announced the execution of its remaining 49.9% stake in MGM Grand Las Vegas and Mandalay Bay. Announced early last month, the seller was Blackstone Real Estate Income Trust.
VICI paid Blackstone $1.27 billion in cash and assumed $3 billion in debt to fully acquire the iconic Strip properties. With the completion of the transaction, VICI is the sole owner of the two casinos.
MGM will continue to operate the properties through an annual lease. MGM’s rent liability for 2023 is $310 million.