Century Casinos announced Wednesday it has entered into a definitive agreement for Vici Properties to acquire the real estate assets of four casinos it operates in the Canadian province of Alberta, with the transaction expected to close in H2 2023. The sale-leaseback transaction encompasses Century Casino & Hotel Edmonton; Century Casino St. Albert; Century Mile Racetrack and Casino in Edmonton; and Century Downs Racetrack and Casino in Calgary.
The agreement was entered for an aggregate purchase price of CAD 221.7 million ($164.4 million) in cash, Century Casinos unveiled in a statement. The prince includes CAD 192.3 million ($142.6 million) to be paid to subsidiaries of Century Casinos and approximately CAD 29.4 million ($21.8 million) to acquire the fee simple real estate interest in Century Downs from the owner of such interest.
The Colorado-based casino operator anticipates retaining approximately CAD 154.5 million ($114.6 million) of the purchase price after giving effect to the purchase of the Century Downs land, selling expenses, Canadian and US taxes and proceeds to be paid to the minority owners of Century Downs, it said in a press release.
John Payne, Vici President and COO, said: “We are thrilled to announce our third international investment with the acquisition of Century’s four Canadian casino assets, demonstrating our ongoing desire to expand internationally and confidence in the Canadian gaming market. We are also pleased to continue growing our partnership with Century by supporting their asset monetization strategy, unlocking value that fuels their strategic growth initiatives.”
Century Mile Racetrack and Casino in Edmonton
Simultaneous with the closing of the transaction, Century’s Canadian portfolio will be added to the existing triple-net master lease agreement between Vici and the operator, and annual rent will increase by CAD 17.3 million ($12.8 million), representing an implied acquisition capitalization rate of 7.8%.
Additionally, the term of the master lease will be extended such that, upon closing of the transaction, the lease will have a full 15-year initial base lease term, with four 5-year renewal options.
“We are pleased to extend our good partnership with Vici to our Canada portfolio,” Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos, remarked. “This transaction unlocks the real estate value of our Canadian properties while continuing our Canadian operations and provides us with greater financial flexibility as we continue to grow.”
Century's recently acquired Nugget Casino Resort
Century Casinos intends to use the sale proceeds to fund improvements at the Nugget Casino Resort in Reno-Sparks, Nevada, which it completed acquiring last month for approximately $100 million. Additionally, proceeds will also be used for general corporate purposes.
“We are also looking at the potential to apply some proceeds to pay down debt under our credit agreement and/or to return funds to shareholders through stock repurchases and/or a special dividend. We continue to evaluate the optimal use of our capital,” the Co-CEOs added.