Caesars Entertainment has completed its sale of Harrah’s Philadelphia Casino & Racetrack. However, the property is not really changing hands.
In fact, Harrah’s Philadelphia is a part of another sale and lease-back deal by the US casino giant with bankruptcy spinoff real estate investment trust (REIT) VICI Properties Inc.
Caesars first announced plans for the now completed deal in July. The gist is that Caesars sells Harrah’s Philadelphia for $82.5 million in cash and then leases it back from VICI. Caesars will continue to run the casino and racetrack in Chester, PA. Moreover, from a casino patron’s perspective, nothing will change.
It’s a move Caesars’ President and Chief Executive Officer Mark Frissora said provides the organization with financial flexibility:
“The completion of this transaction with VICI provides Caesars with financial flexibility and reduces the volatility of our future rent payments, demonstrating our commitment to creating value for our shareholders while maintaining financial discipline.”
VICI Properties and Caesars
VICI Properties emerged out of Caesars’ Chapter 11 bankruptcy reorganization in 2015. In fact, the restructuring saw the company split in two, with the VICI Properties REIT taking ownership of Caesars’ casinos and the Caesars Entertainment operating company managing the properties.
REIT’s are designed to allow smaller investors into large real estate investments. They provide certain tax breaks. Some members of US Congress opposed the reorganization when the VICI Properties REIT was created. They claimed allowing Caesars to create a REIT amounted to handing one of the largest casino companies in the country a taxpayer-funded subsidy.
However, the spinoff went ahead and VICI Properties launched in 2017 with the ownership of 19 Caesars casinos, including the flagship Caesars Palace Las Vegas property.
The company inked a similar sale and lease-back deal for Harrah’s Las Vegas in December 2017.
With the Harrah’s Philadelphia Casino & Racetrack deal complete, VICI’s portfolio now includes 21 casino properties. All these properties are all leased back to Caesars Entertainment and continue to operate under its popular casino brands, including:
VICI Properties has grown into one of the country’s largest owners of gaming, hospitality and entertainment destinations. The company went public in February 2018, raising $1.2 billion through its initial public offering on the New York Stock Exchange.
Harrah’s Philadelphia opened in 2006 under the name Harrah’s Chester. It is only a half-hour drive from the center of Philadelphia.
However, the property became known as Harrah’s Philadelphia in 2012 in a move designed to appeal to the broader Philadelphia market.
The casino now includes more than 2,800 slots, 125 table games and a World Series of Poker-branded poker room. A Harrah’s sportsbook is currently under construction.
Additionally, Caesars operates 47 casinos in 13 states and five different countries.