Churchill Becomes Latest Player in Casino Business
- Dec 20, 2010
December 20, 2010
By Barbra Murray, Contributing Editor
Churchill Downs has taken a major step in its diversification strategy by purchasing Harlow’s Casino Resort & Hotel in Greenville, Miss., a move that marks the thoroughbred racing facilities owner’s entry into the casino resort world. Churchill Downs acquired the property for $138 million in cash from Levine Leichtman Capital Partners, which had shelled out approximately $70 million to develop Harlow’s in 2007.
Located just a stone’s throw from the Mississippi River, Harlow’s occupies 69 acres of leased land at the base of the newly constructed, $336 million U.S. Highway 82 Bridge that provides a direct link across the border to Arkansas. In addition to 33,000 square feet of gaming space, the property features a five-story hotel with 105 guestrooms, a 2,600-seat entertainment center and three dining areas.
In a press release, Lauren Leichtman, CEO of LLCP, describes Harlow’s as a “first-class gaming facility, which has exceeded all expectations of growth and popularity since it opened its doors.”
Harlow’s has the advantage of being located in a fairly isolated market away from Mississippi’s leading Gulf Coast and Tunica gaming destinations. “Greenville is not hyper-competitive like Tunica or Gulf Coast,” Jacob Oberman, Director of Gaming Research & Analysis with real estate services firm CB Richard Ellis’ Global Gaming Group, told CPE. “The casinos in the Greenville, Vicksburg and Natchez areas still do pretty well because the competition is limited and taxes in Mississippi are low.”
Churchill Downs financed the Harlow’s acquisition, which closed on the heels of the company’s obtainment of a gaming license from the Mississippi State Gaming Commission, with cash on hand and proceeds from its revolving credit facility. The transaction further boosts the casino hotel market’s sales volume for 2010, which has greatly surpassed that of 2009. “Sales activity has really picked up; it was practically nonexistent in 2009 and the beginning of 2010,” Oberman said. “Seven deals were announced this year and five of them, including Harrow’s, were traditional deals, not debt-equity arrangements.”
Among the deals, Full House Resorts signed on to acquire the Grand Victoria Casino & Resort in Rising Sun, Ind., for $43 million and Tropicana Entertainment Inc. agreed to sell the Vicksburg Horizon Casino in Vicksburg, Miss., in exchange for just over $3 million in cash and the buyer’s assumption of existing debt.