Eldorado Resorts Agrees to Sell Three Casinos for $385M

RENO, NV—Locally-based Eldorado Resorts, Inc. reports it has entered into agreements to sell its Mountaineer Casino Racetrack and Resort in New Cumberland, WV; Isle Casino Cape Girardeau in Cape Girardeau, MO and Lady Luck Casino Caruthersville in Caruthersville, MO in an all cash deal valued at $385 million.

The agreements call for Century Casinos, Inc. of Colorado Springs, CO to acquire the operating assets of the three properties from Eldorado Resorts for approximately $107 million and VICI Properties Inc. of New York City to acquire the land and real estate assets of the three properties for approximately $278 million. The transactions are expected to close in early 2020.

Tom Reeg, CEO of Eldorado Resorts, says, “The agreements to divest Mountaineer Casino, Isle Casino Cape Girardeau and Lady Luck Casino Caruthersville are consistent with our continued focus on optimizing the results from our regional gaming platform, generating growth through strategic acquisitions and realizing value through sales.”

He adds, “The sale price for these three properties represents an attractive multiple of their aggregate trailing twelve months cash flows and provides additional capital that we expect to deploy for shareholder value enhancing initiatives.”

Eldorado Resorts currently owns and operates 26 properties in 12 states, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, Ohio and West Virginia. In aggregate, Eldorado’s properties feature approximately 28,000 slot machines and VLTs and approximately 750 table games, and more than 12,500 hotel rooms.

Isle Casino Cape Girardeau is located in Cape Girardeau, MO approximately 120 miles south of St. Louis, overlooking the Mississippi River. The property opened in 2012 and consists of a dockside casino featuring 41,500 square feet of casino space, 863 gaming machines, 20 table games, three dining venues, a pavilion and an entertainment center. The property also includes a wide variety of non-gaming amenities, including an events center.

Lady Luck Caruthersville is a riverboat casino located along the Mississippi River in Caruthersville, MO. The property opened in 1995 and consists of a dockside casino featuring 21,000 square feet of casino space, 507 slot machines, nine table games, two dining venues, a 40,000 square foot pavilion and a 28-space RV park.

The Mountaineer Casino, Racetrack and Resort is a hotel, casino, entertainment and live thoroughbred horse racing facility located in New Cumberland, WV, one hour from Downtown Pittsburgh. The property originally opened in 1951 with the casino opening in 1994 and features a 357-room hotel, approximately 1,486 slot machines, 36 table games, a poker room, a racetrack and five dining venues.

Simultaneous with the closing of the transaction, Century Casinos will enter into a triple net lease agreement with VICI for the three casino properties. The lease will have an initial annual rent of approximately $25.0 million and an initial term of 15 years, with four five-year renewal options. The pro-forma rent coverage ratio at the acquired portfolio level is 2.1x.

The purchase price represents an implied trailing 12-month pro-forma earnings before interest, taxes, depreciation and amortization multiple of 4.1x for the three casinos, Century Casinos states.

Century Casinos will finance the $107.0 million purchase with a new credit facility that is anticipated to be issued by Macquarie Capital.

“This transaction further highlights our commitment to enhancing shareholder value,” Erwin Haitzmann, co-CEO of Century Casinos, says. “Cape Girardeau, Caruthersville and Mountaineer expand the strategic diversity of Century Casinos with attractive assets in strong, stable markets. The expected increase to our free cash flow will allow us to remain well positioned to reduce leverage and evaluate additional strategic growth opportunities.”

Upon closing for the three casinos, Century Casinos’ portfolio will increase to 10 casinos in North America that include more than 6,700 gaming machines and 150 table games. VICI Properties, a REIT, currently maintains a national portfolio consisting of 23 gaming facilities comprising more than 40 million square feet and features approximately 15,200 hotel rooms and more than 150 restaurants, bars and nightclubs.

John Payne, president and COO of VICI Properties, says of the deal. “This transaction demonstrates VICI’s ability to execute accretive acquisitions that bring value to our shareholders, while also diversifying our tenant base and expanding our geographic footprint into a new market, West Virginia. We are excited to partner with Century, as they are expert operators of small to mid-sized regional assets and are beginning their journey of expansion into the U.S. market.”

He adds, “Cape Girardeau, Caruthersville and Mountaineer are competitive local assets in stable regional markets and are a great fit for Century’s growing portfolio. The nature of this transaction allows both Century and Eldorado to realize strategic value for their respective shareholders, while also furthering our strategic goals to diversify and grow our portfolio in an accretive manner.”

Macquarie Capital is acting as exclusive financial advisor and Milbank LLP is acting as legal counsel to Eldorado; Stifel is acting as exclusive financial advisor and Faegre Baker Daniels LLP is acting as legal counsel to Century Casinos and Kramer Levin Naftalis & Frankel LLP is acting as legal advisor to VICI Properties in connection with the transaction.