The partnership of Penn National Gaming Inc. and VICI Properties, which is Caesars Entertainment’s spinoff real estate investment trust, has recently completed the $1 billion purchase of the Downtown Detroit-based Greektown Casino-hotel. While VICI Properties has parted with about $700 million for the purchase of the land and real estate assets of the Greektown Casino-hotel, Penn National spent approximately $300 million in cash for the operating assets of the property.
The plans for the acquisition deal were initially announced in November 2018 – this was right after Penn National entered a triple-net lease agreement with VICI Properties Inc. for the casino. According to Timothy J. Wilmot, the chief executive officer of Penn National, the acquisition of the Greektown Casino-Hotel was going to play a huge role in the expansion of the company’s already diverse operating based. This was a justifiable claim especially considering the fact that the facility is extremely well-positioned in one of the United States’ largest regional gaming markets.
Furthermore, the downtown area of Detroit is set to experience an influx of “new residents, businesses, tourists and employment” due to the increasing number of billion-dollar investments in its residential, entertainment, cultural and commercial sectors. Since Greektown Casino-Hotel is the only casino in that part of the town, it is certainly going to be a go-to place for the people who will be in that area.
“Greektown Casino-Hotel further strategically diversifies our revenue, operating and customer base, and presents well-defined paths to the realization of significant synergies… With the expected increase to our free cash flow, we remain well positioned to reduce leverage, evaluate additional accretive strategic growth investments and opportunistically return capital to shareholders,” Mr. Wilmot said.
More on the Casino-Hotel
The aforementioned triple-net lease agreement with VICI properties involves a lease with an initial total annual rent of about $55.6 million as well as an initial term of 15 years, with four, five-year tenant renewal options. Penn National will be guaranteeing the tenant’s obligations under this lease.
Launched way back in 2000, the Greektown Casino-Hotel has grown tremendously – it now boasts of a whopping 100,000 square feet of casino space, over 2500 gaming machines, a poker room, 6o table games, seven fast food outlets, three restaurants, four bars as well as a coffee shop. In addition to those, the gaming facility further features a AAA Four Diamond 400-room, luxury high-rise hotel with 14,000 square feet of event and catering space.