VICI Properties acquires Foundation Gaming’s properties for $293 million with 8.3% capitalization rate
Real estate investment trust, VICI Properties Inc., has purchased the real estate assets of the Fitz Casino & Hotel (“Fitz”), located in Tunica, Mississippi, and the WaterView Casino & Hotel (“WaterView”), located in Vicksburg, Mississippi, from Foundation Gaming & Entertainment, LLC, a casino-entertainment company for a total purchase price of $293.4 million. The transaction has been made in cash.
As part of the deal, subsidiaries of Foundation Gaming have agreed on a triple-net master lease agreement for assets. The Foundation master lease has an initial annual rent of $24.25m, which represents an implied acquisition capitalization rate of 8.3%, and an initial term of 15 years, with four 5-year tenant renewal options and the tenant obligations under the lease guaranteed by the parent entity, Foundation Gaming.
Expanding market-leading portfolio:
VICI owns market-leading gaming, hospitality, and entertainment destinations, such as Caesars Palace Las Vegas, MGM Grand, and the Venetian Resort Las Vegas, three of the most iconic facilities on the Las Vegas Strip. The property acquired from the latest deal, Fitz, will expand the trust’s impressive portfolio, which is one of the largest in the industry.
Fitz opened in 1994 to be acquired by Foundation Gaming in 2018. It is located in Tunica, Mississippi, featuring around 38,500 square feet of gaming space, 864 slot machines, 9 table games, as well as 506 room hotel and six food and beverage outlets.
WaterView opened in 1993 to become a property of Foundation Gaming in 2015 as the No.2 asset within the Vicksburg market. As the name of the resort suggests, the property is situated along the banks of the Mississippi River to ensure an outstanding visitor experience. Water View features 37,000 square feet of gaming space, 650 slot machines, 10 table games, cafes, restaurants, and a hotel with 122 rooms.
Attractive capitalization rate:
Danny Valoy, Vice President of Acquisitions and Finance of VICI Properties, said: “We are excited to partner with the experienced team at Foundation Gaming given their track record of value creation in regional gaming markets. Mississippi continues to be one of the largest regional gaming markets, and we are thrilled to be expanding our portfolio into the Vicksburg market at an attractive capitalization rate.
Valoy added: ”This transaction highlights VICI’s ability to execute accretive deals and close in an expeditious manner to meet our partners’ objectives while creating value for our shareholders.”
Reinforcing growth foundation:
Foundation Gaming owns, operates, and develops casino properties in almost every regional market in the United States. The latest partnership with the distinctive trust is a great opportunity to reinforce the foundation for future growth, according to the Chairman of Foundation Gaming, Allan Solomon.
He said: “The extraordinary efforts of our property teams have given us the opportunity to partner with VICI on our two Mississippi properties. And by doing so, we have positioned our company for continued growth in the regional gaming space.” Mr.Solomon added: ”We look forward to partnering with VICI in the future and we would also like to thank the team at Credit Suisse who provided invaluable assistance with this transaction.”