Hard Rock, VICI Ink Mirage Lease Agreement

As part of its recently completed acquisition of the Mirage on the Las Vegas Strip, Hard Rock International inked a new lease accord for the venue with owner VICI Properties (NYSE: VICI).

Under the terms of the agreement, the gaming arm of Florida’s Seminole Tribe signed a new triple-net lease pact with the casino landlord valued at $90 million that runs 25 years with three, 10-year tenant renewal options.

Rent under the lease will escalate annually by 2.0% (with escalation of the greater of 2.0% and Consumer Price Index (CPI), capped at 3.0%, beginning in lease year 11) and the tenant’s obligations under the lease will be guaranteed by Hard Rock,” according to a statement.

In triple-net leases, tenants, not landlords, are responsible for financing improvements to the property. Hard Rock is planning material alterations at Mirage, including the operator’s famed guitar design, as part of the effort to transform the property into a Hard Rock venue over the next several years.

VICI noted it may “fund Hard Rock’s planned redevelopment of the Mirage through VICI’s Partner Property Growth Fund.” The real estate investment trust (REIT) has engaged in similar deals with gaming companies across the country.

VICI MGM Exposure Trimmed

Hard Rock announced last December it purchased the operating rights to the venue for $1.075 billion from MGM Resorts International (NYSE: MGM).

By way of its acquisition of MGM Growth Properties, VICI also owns the real estate of MGM’s regional casinos throughout the US. So, even with the sale of the Mirage, the REIT’s relationship with the casino operator runs deep, encompassing multiple states.

The addition of Hard Rock to its client lineup is a potential boon for VICI. That’s because tenant diversification is a fundamental trait analysts and investors evaluate with REITs, particularly those in the gaming space.

VICI Empire Expanding

In addition to the MGM venues, VICI owns famed Strip properties Caesars Palace, the Venetian, and the Venetian Convention Center.

“VICI Properties’ national, geographically diverse portfolio consists of 43 gaming facilities comprising over 122 million square feet and features approximately 58,700 hotel rooms and more than 450 restaurants, bars, nightclubs, and sportsbooks,” according to the company.