In a unanimous vote, four members of the Michigan Gaming Control Board on Tuesday, May 21, 2019, approved the sale of Downtown Detroit’s Greektown Casino-Hotel to Penn National Gaming, Inc. (PENN: Nasdaq) and New York City-headquartered real estate investment trust (REIT), VICI Properties, Inc.
The $1 billion all-cash deal was first announced in November last year by gaming operator, Jack Entertainment LLC. The gaming, hospitality, and entertainment corporation is led by billionaire businessman, Dan Gilbert, who is also the founder of Quicken Loans and the owner of the NBA’s Cleveland Cavaliers.
According to Crain’s Detroit Business…
Vici Properties Inc., a New York-based REIT spun off from Las Vegas-based Caesars Entertainment Corp., revealed last Thursday that its purchase of real estate and land assets of the Detroit, Michigan property for some $700 million in cash had been finalized, while the approximately $300 million in cash transaction from the Wyomissing, Pennsylvania-based operator for the venue’s operating assets, had likewise been completed.
In the red:
Last fall the Detroit Free Press reported that the Greektown casino property carried approximately $400 million worth of debt, however, after the control board meeting on Tuesday, Chief Executive Officer for Penn National Gaming, Timothy Wilmott, said that Gilbert’s team had been operating the casino in the black.
Wilmott reportedly said, “The fact that we’re the smallest casino of the three certainly gives us opportunities for improvement.”
The CEO added that while Penn National hasn’t revealed any immediate plans for physical changes to the Downtown Detroit property, they will be bringing in John Drake as the venue’s new general manager.
The Detroit-based gaming, hospitality, and entertainment corporation’s second divestiture of gambling venues within the past six months, in April, Jack Entertainment revealed a $780 million deal that will see its Cincinnati casino and Thoroughbred racetrack in Florence, Kentucky acquired by Hard Rock International and Vici.
The signing of multiple contracts followed a “strategic assessment” of the Dan Gilbert-owned company‘s business portfolio. It includes the sale of its JACK Cincinnati Casino property in Ohio, alongside its Thoroughbred racetrack in Northern Kentucky, Turfway Park, to the NYC-headquartered REIT and Seminole Hard Rock Entertainment, Inc. subsidiary, Hard Rock International.
According to GlobeSt.com, President and Chief Operating Officer for VICI, John Payne, commented on its latest acquisition…
“The Greektown acquisition is our second transaction with Penn National, further solidifying our relationship with a best-in-class operator and demonstrating our commitment to deliver portfolio income of the highest character and quality. In the past five months we have closed on three large-scale acquisitions, deploying $1billion in proceeds while adding approximately $100 million of annualized rent, and broadening our geographic diversity by expanding into two new jurisdictions.”
Meanwhile, EVP and Chief Financial Officer for the NYC firm, David Kieske, notes…
“We utilized the cash proceeds on our balance sheet that we raised during our successful November 2018 equity issuance to fund the Greektown transaction. Going forward, we continue to target leverage neutral financing over the long-term and will manage our balance sheet prudently to maximize transaction accretion while maintaining flexibility for long-term growth.”
In business since 2000, Greektown Casino-Hotel includes a AAA Four Diamond 400-room high-rise hotel with 14,000 square feet of meeting and event space. The 100,000 square feet of casino space, offers approximately 2,700 gaming machines and 60 table games, a poker room, three dining options and seven fast casual food outlets, four bars and a coffee shop.