The recent $1bn sale of Detroit’s Greektown Casino Hotel by US businessman Dan Gilbert added the latest string to the Vici Properties bow, with the 30-story tower the newest addition to the firm’s gaming, hospitality and entertainment portfolio.

Stressing an aim of becoming “America’s most dynamic leisure and experiential real estate company,” Vici invested $700m for the land and real estate assets of its latest acquisition, complemented by a further $300m from casino and racetrack operator Penn National Gaming in order to gain the operating assets.  

Vici is committed to utilising a disciplined M&A approach, whereby we evaluate potential acquisitions along four key criteria

John Payne, president & COO, who counts in excess 20 years experience as an operator in the gaming space with Caesars across various roles, spoke to CasinoBeats regarding what made the purchase such an attractive proposition: “We are very excited about our recently announced acquisition, along with Penn as the operator, of the real estate assets of the Greektown Casino Hotel.

Vici Properties 225,756 square foot Bally‘s Atlantic City

“The extremely high quality of this asset, with $134 million of capex since 2014, along with the downtown Detroit urban location, provides multiple opportunities for Penn to continue to drive growth.

“We also favourably view the regulatory landscape, with all 3 potential licenses for Detroit having already been issued. Finally, the magnitude of rent that we were able to acquire, $56 million, at an attractive cap rate of 7.9%, provides accretion for Vici shareholders.”

Before discussing the wider operations of Vici, and its far-reaching US-based footprint: “We currently own, through a triple net lease structure, the real estate for 23 casinos, including our 3 announced but not yet closed acquisitions, across the US ranging from Caesars Palace Las Vegas to Bally’s Atlantic City to the Horseshoe Hammond outside Chicago.

“Vici’s triple net structure means that we allow our operating partners to control all aspects of their gaming operations.”   

“We believe that our well balanced portfolio … provides both upside potential with stability”

With involvement in such large scale transactions very much the norm for Vici, Payne, ex-Atlantic City regional president, president of central division and CEO of Caesars Entertainment Operating Company, went on to highlight what key factors are considered when assessing the acquisition of gaming properties: “Vici is committed to utilising a disciplined M&A approach whereby we evaluate potential acquisitions along four key criteria:

  1. Market quality.
  2. Asset real estate quality.
  3. Asset income quality.
  4. Accretion to our shareholders.

“These criteria allow us to ensure we are going into business with the right long term partner, which we are confident is the case in our partnership with Penn National, as well as the right gaming market, which we are also confident is the case with Detroit, a city undergoing a large amount of investment in its urban core.”

Vici Properties 1.4+ million square foot Horseshoe Bossier City

With operations stretching multiple US states, Payne believes a well balanced portfolio, as opposed to a strategic targeting of particular regions, ensures Vici’s sustained success: “We believe that our well balanced portfolio, with 35% of our rent coming from Las Vegas and 65% from the regional properties, provides both upside potential with stability.

“Vici’s breadth of ownership, as well as our parent guarantees from our tenants, gives us confidence in our future rental streams.”

Concluding: “The Vici story is still in the very early innings. We have certainly commented on our eventual plans to move into other experiential real estate areas such as entertainment, lodging, etc, but still see many near-term opportunities in the gaming sector, that will keep us occupied for the next few years.”