JV to Acquire Detroit Casino-Hotel for $1B
- Nov 19, 2018
VICI Properties Inc. and Penn National Gaming Inc. will soon become the new owners of the Greektown Casino-Hotel in Detroit. The partners inked definitive agreements to acquire the real property and operations of the casino-hotel from JACK Entertainment LLC for approximately $1 billion in cash.
Greektown opened its doors to visitors for the first time in 2000, offering 75,000 square feet of casino space. A renovation program completed in 2009 expanded the gaming space to 100,000 square feet and added a 30-story, 400-key hotel with 14,000 square feet of event space.
Today, Greektown holds the distinction of being the only casino located in the heart of Detroit’s downtown, where revitalization is underway. “Detroit is undergoing an exciting renaissance as a result of billions of dollars of new investments in the city’s residential, commercial, entertainment and cultural center, all of which are driving new residents, businesses, tourists and employment to the downtown area,” Timothy Wilmott, CEO of Penn National Gaming Inc., said in a prepared statement.
A new history
Like the City of Detroit, Greektown has had its financial challenges. After filing for Chapter 11 protection, the casino-hotel emerged from bankruptcy in 2010, four years before the city. In 2013, an affiliate of Rock Ventures, the predecessor company of Jack Entertainment, agreed to acquire a majority interest in the asset and proceeded to invest capital in a redesign and remodeling. Today, Greektown is a successful gaming property in a successful gaming town.
“The Detroit market has been steady the past several years, growing 1.1 percent in 2017,” Brent Pirosch, director of gaming consulting with commercial real estate services firm CBRE’s Global Gaming Group, told Commercial Property Executive. The numbers look even more promising for 2018, as casino revenue has increased year-to-date through October by 2.4 percent.
Changing of the guard
Per terms of the agreement with JACK, VICI will acquire Greektown’s land and real estate assets for approximately $700 million and Penn National will purchase the casino-hotel’s operations for $300 million. Penn National will ink a triple net lease agreement with VICI concurrent with the completion of the acquisition transaction. Annual rent will initially total $55.6 million under the 15-year lease, which offers the option for four five-year renewals.
VICI and Penn National must get the green-light from the Michigan Gaming Control Board to proceed with the acquisition. If all goes as planned, the transaction will close in mid-2019.
Image courtesy of JACK Entertainment