A leaseback transaction between VICI Properties and Pure Canadian Gaming Group saw the real estate investment trust (REIT) acquire four gaming properties in Canada.
Sale-Leaseback Model
VICI Properties announced it has acquired the real estate assets of four PURE Casinos in Alberta – PURE Casino Edmonton in Edmonton, PURE Casino Yellowhead in Edmonton, PURE Casino Calgary in Calgary, and PURE Casino Lethbridge in Lethbridge – from PURE Canadian Group, for an aggregate price of C$271.9 million ($200.8 million).
Commenting on the announcement, John Payne, president and chief operating officer of VICI Properties, outlined the development as “another momentous first” for the experiential real estate investment trust that has been building its portfolio of market-leading properties over the last five-and-a-half years.
The acquisition of PURE Casino’s property portfolio expanded VICI Properties’ international footprint into Canada and Payne believes that the transaction highlighted VICI’s “ability to source, structure, and fund cross-border transactions” in pursuit of new opportunities to deliver growth for the business.
“We are pleased to add PURE as our eleventh tenant and look forward to a mutually beneficial partnership,” Payne concluded.
Cash and Credit from Revolver
The transaction was financed in a combination of available cash and credit available under the REIT’s existing revolving credit facility in Canadian dollars. Upon transaction close, VICI executed a triple-net master lease agreement with PURE Canadian Gaming covering all four properties.
Guaranteed by the parent entity, the PURE Master Lease stipulates that VICI Properties is entitled to an annual rent of approximately C$21.8 million ($16.1 million) for an initial term of 25 years, with four 5-year tenant renewal options. The rent represents an implied acquisition capitalization rate of 8%.
The four PURE casinos are the latest to become part of VICI Properties’ real estate portfolio, after the acquisition of the real estate assets of two casinos in Mississippi in December.
VICI Properties purchased the real estate assets of Fitz Casino & Hotel and WaterView Casino & Hotel from Foundation Gaming & Entertainment in a sale-leaseback deal for a cash consideration of $293.4 million and simultaneously agreed to a triple-net master lease under which it will receive $24.25 million a year for an initial term of 15 years with four 5-year renewal options.
Also last month, VICI Properties announced plans to use its Partner Property Growth Fund and finance an expansion project for Century Casinos in Missouri, funding a new land-based casino at Century Casino Caruthersville, in Caruthersville, Missouri, and a 38-room hotel tower.