American casino operator Wynn Resorts Limited has announced the signing of a $1.7 billion lease-back deal with real estate investment trust Realty Income involving its Encore Boston Harbor development.
The Las Vegas-headquartered firm used an official Tuesday press release to declare that this arrangement will see it sell ‘all of the land and real estate assets’ of the 671-room Massachusetts facility although it is to retain title over an adjacent 13-acre plot of land. The casino company pronounced that it subsequently intends to bring a covered parking area as well as ‘other non-gaming amenities’ to this bordering parcel although the new agreement contains a clause that could involve the similar divestiture of this tract to Realty Income ‘for up to $20 million of additional rent at a specified cap rate.’
Wynn Resorts Limited is additionally responsible for the Wynn Las Vegas and Encore Las Vegas facilities in Nevada while holding a 72% stake in Wynn Macau Limited, which runs the 1,000-room Wynn Macau and even larger Wynn Palace Cotai venues. The Nasdaq-listed operator recently disclosed that it soon intends to embark on a plan to bring a multi-billion-dollar integrated resort to the United Arab Emirates featuring a luxury hotel with more than 1,000 rooms as well as a shopping mall, a gaming element and a large selection of meeting and convention facilities.
Opened in June of 2019 at a cost of $2.6 billion, Encore Boston Harbor is situated a little over a mile north of downtown Boston and houses 16 restaurants and lounges alongside a spa, a ballroom and a 210,000 sq ft gaming floor offering a selection of over 3,150 slots and 230 gaming tables. The waterfront enterprise moreover has a retail element and a selection of meeting spaces while being looped by a six-acre public park.
Craig Billings serves as the Chief Executive Officer for Wynn Resorts Limited and he used the press release to proclaim that the Encore Boston Harbor lease-back deal representing a 5.9% cap rate will be ‘subject to customary closing conditions including required regulatory approvals’ but is now expected to close by the end of the year. The boss additionally noted that his company will be simultaneously entering into an associated triple-net lease agreement that is to run for 30 years and contain a minimum $100 million annual rental commitment.
Read a statement from Billings…
“Encore Boston Harbor is the premier gaming resort on the east coast and the valuation we achieved in this sale reflects the property’s quality. Equally important, the bespoke structure and terms of the lease allow us to maintain a great deal of operating flexibility across economic cycles. The proceeds of the transaction also provide us with liquidity for several of our upcoming development projects and the potential to retire other debt.”