Caesars Entertainment, VICI Properties to Sell Gaming Resort
- Apr 27, 2020
Bally’s Atlantic City Hotel & Casino will soon come under new ownership. Caesars Entertainment Corp. and VICI Properties Inc. have entered into an agreement to sell the New Jersey gaming property to Twin River Worldwide Holdings Inc. for a cash sum of $25 million.
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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 optimize its individual business.
Bally’s first opened its doors as Bally’s Park Place in 1979, a project of Bally Manufacturing Corp., and began operating under its current name in 2000. 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 center 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 timeframe 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.