VICI Could Eye Acquisition of Caesars Forum, Says Analyst

VICI Properties (NYSE: VICI) could consider purchasing the Caesars Forum convention center on the Las Vegas Strip, which the real estate investment trust (REIT) has an option to buy.

That’s the take of Deutsche Bank analyst Carlo Santarelli who recently met with VICI management, noting the often acquisitive gaming landlord has a variety of acquisition opportunities with Caesars Entertainment (NASDAQ: CZR), its largest tenant.

Should VICI opt to acquire the Caesars Forum prior to 2028, it would likely pay 13x the undisclosed annual rent.

Should the real estate firm move forward with that transaction, it would add to its Strip meeting space holdings, which include the Venetian Convention Center. VICI acquired that real estate in 2022 when it bought the integrated resort of the same name.

Caesars Forum Sale Might Make Sense for Owner

The Caesars Forum opened in October 2020 amid the coronavirus pandemic and cost $375 million to build. The property provides convention center space for the Flamingo, Harrah’s, and the LINQ, all of which are operated by Caesars.

While the casino giant hasn’t commented on Santarelli’s theory about selling the convention center, analysts widely believe the company will engage in asset sales to further reduce its debt. Divesting the real estate of Caesars Forum would also jibe with previous moves by the gaming company to unload noncore assets, including last year’s sale of LINQ Promenade. As for other opportunities for VICI, Santarelli said it’s not likely the REIT will pursue sale-leaseback deals with tribal casino operators.

(VICI) remains skeptical of the feasibility of the traditional sale-leaseback model on land in trust, with management noting a meaningfully heightened risk profile,” noted the analyst.

Last year, rival Gaming and Leisure Properties (NASDAQ: GLPI) reached a financing agreement with a California tribal casino operator, marking the first time a REIT engaged in such a transaction with a tribal gaming entity. Industry observers believe more such deals could occur over the long term.

Other VICI Tidbits

Santarelli also pointed out that VICI is staying abreast of developments pertaining to the New York City-area casino bidding process because it owns the real estate of Empire City Casino and Yonkers Raceway, which is operated by MGM Resorts International (NYSE: MGM).

“It is logical to conclude that VICI would participate in the financing of the development, with a transaction, in our view, that is structured akin to the Park MGM development,” said Santarelli in his report.