Caesars Entertainment and VICI Properties to Sell New Jersey Gaming Resort

Main Photo: The Bally’s Atlantic City, Atlantic City, New Jersey

Date: April 2020

Location: Atlantic City, New Jersey, USA

Name:  Currently Bally’s Atlantic City Hotel & Casino

No. of Keys: 1,251

Seller: Caesars Entertainment Corp. and VICI Properties Inc. have entered into an agreement to sell the New Jersey gaming property. The Marlborough-Blenheim Hotel stood on the site before the casino was built. It is famous for its address of “Park Place and the Boardwalk”, two locations popularised by the board game Monopoly. Bally’s is one of the largest hotels on the boardwalk with nearly (then) 1,169 rooms. It’s Dennis Tower opened in 1921. In 1997, The Wild Wild West Casino was opened as an expansion of Bally’s.

In 2005, Harrah’s Entertainment (now Caesars Entertainment Corporation) purchased Bally’s along with Caesars. The boardwalk side of Bally’s was renovated in 2009. The facade of the Dennis Tower was refurbished and a row of shops between the Dennis Hotel and the boardwalk was demolished, which opened the plaza of the Dennis Tower to the boardwalk.

In 2012, The Ridge closed its gambling and food amenities. The tower’s 500 hotel rooms continued to be used for Bally’s guests until it was sold in 2013 to be reopened as the independent Claridge Hotel.

In October 2017, ownership of Bally’s was transferred to Vici Properties as part of a corporate spin-off, and the property was leased back to Caesars Entertainment.

Buyer: Twin River Worldwide Holdings Inc. have bought the property for a cash sum of US$25m.

Twin River owns and manages seven casinos, two in Rhode Island, one in Mississippi, one in Delaware, and three casinos as well as a horse racetrack that has 13 authorised OTB licenses in Colorado.

Properties include Twin River Casino Hotel (Lincoln, RI), Tiverton Casino Hotel (Tiverton, RI), Hard Rock Hotel & Casino (Biloxi, MS), Dover Downs Hotel & Casino (Dover, DE), Golden Gates Casino (Black Hawk, CO), Golden Gulch Casino (Black Hawk, CO), Mardi Gras Casino (Black Hawk, CO) and Arapahoe Park racetrack (Aurora, CO).

Its’ casinos range in size from 695 slots and 17 table games combined for Colorado facilities to properties with over 4,100 slots, 125 table games and 48 stadium gaming positions, along with hotel and resort amenities. Its shares are traded on the New York Stock Exchange.

Under the terms of the agreement, VICI will pocket $19 million on the transaction and Caesars will walk away with the remaining $6 million. “The sale of Bally’s Atlantic City is a long-term strategic initiative that Caesars Entertainment has been pursuing for some time,” a spokesperson for Caesars Entertainment Corp. told Commercial Property Executive. In a prepared statement, VICI, which spun off from Caesars as an experiential asset REIT in 2017, noted that the deal is indicative of the company’s enduring commitment to work collaboratively with its tenants to optimise its individual business.

Sited on nearly 9 waterfront acres along the famed Boardwalk, the casino resort features approximately 121,600 square feet of gaming space, a 1,251-key hotel, 63,600 square feet of convention centre space, as well as the requisite restaurants, bars, retail offerings and spa. In January and February 2020, the property recorded total gaming revenue of $11.4 million and $12.1 million, respectively, marking a continuation of a drop seen in 2019. In its fourth quarter earnings report, Caesars attributed the decline in gaming volume last year to increased competition in the New Jersey market.

Gaming, like so many other industries in the U.S., is taking a big hit due to mandated closures related to COVID-19; Bally’s has been temporarily shuttered since the evening of March 16, 2020. Experts however, using nationwide crises such as the September 11th attacks and the 2008 recession as points of reference, expect the gaming market to bounce back after the public health emergency has abated. “Regarding casinos revenue recovery, the deciding factors may be in what time-frame a solution presents itself and what long-term damage is done to the economy,” according to a special report by CBRE’s Global Gaming Group. “The quicker things get back to normal, the greater chance we seem to have for a quick recovery of pent-up demand. The longer it drags on, the greater the recovery tail will likely be.”

The Bally’s transaction is on track to close in late 2020 or early 2021, pending FTC and gaming regulatory approvals and other customary closing conditions. News of the agreement follows Caesar and VICI’s announcement of another property disposition earlier this year. In January, the partners inked an agreement to sell Harrah’s Reno Hotel & Casino in Reno, Nev., to CAI Investment for $50 million.

Twin River Worldwide Holdings are acquiring the assets of Bally’s Atlantic City. However, the deal excludes the Wild Wild West casino which contains “The Book” sports betting facility, which will be transferred to Caesars Atlantic City. Twin River also announced that they will acquire a license to give Bally’s their own sports book, online sports betting, I-Gaming.

Price: US$25m

Price per Key: US$19,984

THPT Comment: The price per key, we hope, is a reflection on the downturn on casino hotels in Atlantic City, and not of the Covid-19 issue!

First Seen: Commercial Property Executive

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