Caesars Entertainment Corp. (Caesars Entertainment or Caesars) has completed the previously announced agreement to sell and leaseback the real estate assets associated with Harrah's Las Vegas to VICI Properties (VICI) and to acquire adjacent land from VICI to develop a planned new convention center. Caesars Entertainment received $1.14 billion in cash in return for Harrah's Las Vegas' real estate assets and acquired 18.4 acres of adjacent land as part of the convention center agreement.
"The successful closing of these transactions marks the latest step in our diversified growth strategy," said Mark Frissora, president and CEO of Caesars Entertainment. "The proceeds of the sale of Harrah's Las Vegas will be used to partially fund the previously announced acquisition of Centaur and is expected to allow us to develop the convention center without increasing leverage. In addition, the transactions will allow us to maintain Harrah's Las Vegas' connectivity to our network, while pursuing our plans to develop another important destination right in the middle of our center-Strip footprint."
Caesars Entertainment will continue to operate Harrah's Las Vegas, including gaming, hotel operations and all other amenities. The property will remain a part of the Caesars Entertainment network and continue to benefit from the Harrah's brand, the Total Rewards loyalty network and access to centralized services. The sale and leaseback transaction expands the recently formed relationship between Caesars Entertainment and VICI Properties. As part of the sale and leaseback transaction, Caesars and VICI will enter into a 15-year lease for Harrah's Las Vegas under which Caesars will pay initial annual rent of $87.4 million. The rent will increase contractually in subsequent years. Caesars will have the option to extend the lease for an additional 20 years via four five-year extensions.
The planned convention center is expected to feature 300,000 square feet of flexible meeting space. It will have the largest column-free ballroom in the U.S., state-of-the-art technology and flexibility to accommodate meetings of many different sizes. The conference space is expected to accommodate more than 10,000 attendees and include an outdoor plaza.
Caesars Entertainment and VICI Properties have negotiated for limited purchase rights with respect to the planned convention center upon completion. Subject to certain conditions, Caesars will have the right to require VICI to purchase the convention center and lease it back to Caesars, and in the event Caesars does not exercise its put right, VICI will have an option to acquire the convention center and lease it back to Caesars.