VICI to Offer Up to $700 Million for Venetian Las Vegas Improvements
VICI Properties, a real estate investment trust listed on the New York Stock Exchange (NYSE), revealed on Wednesday that it would furnish up to $700 million for renovations at the Venetian Resort in Las Vegas. The funding is part of VICI's Partner Property Growth Fund strategy and was disclosed on the 25th anniversary of the Venetian's opening. Operator Apollo Global Management, also listed on the NYSE, celebrated the occasion while saying it had invested $1.5 billion into improving the Las Vegas Strip integrated resort.
As per a statement released by VICI, the firm has agreed to provide $700 million in financing through the Venetian Capital Investment plan. Of this amount, $400 million will be drawn in 2024, and an additional $300 million, which the Venetian Resort may choose, but is not obligated, to take in whole or in part before November 1, 2026. The initial $400 million will be distributed in three quarterly installments: $100 million in Q2 2024, $150 million in Q3 2024, and $150 million in Q4 2024.
Owning the most gaming real estate in Las Vegas and the US, VICI is a significant player in the industry.
Partnership between Apollo and VICI Strengthens at Venetian
In March 2021, Apollo Global Management and VICI acquired the Venetian and the Palazzo, as well as the Sands Expo and Convention Center, for $6.25 billion. Apollo contributed $2.25 billion for the operating rights to the properties, while VICI invested $4 billion for the real estate.
Tenants generally bear responsibility for improvements and upgrades to the properties under typical triple-net leases, which dominate the casino industry. Apollo has honored its obligation by spearheading property enhancements at Venetian.
"Redevelopment includes new gaming offerings like the Palazzo High Limit Lounge, a fully-redesigned sportsbook with a multi-year naming rights agreement with Yahoo, the Yahoo Sportsbook powered by William Hill, and a new poker room launching this summer," read a statement published earlier by the Venetian.
In recent times, VICI and other REITs have demonstrated a keenness to lend financially to tenants to improve gambling venues. This practice not only extends REITs' revenue streams but also raises property values, benefiting landlords.
Venetian Rent on the Rise
As part of the financing deal, VICI will enhance Apollo's rental obligations at the Venetian. According to the existing rental contract, rent will increase "on the first day of the quarter immediately following each capital funding at a 7.25% yield."
"The Incremental Venetian Rent will start growing annually by 2.0% on March 1, 2029, and beginning on March 1, 2031, will increase annually at the same rate as the other rent due under the Venetian Resort Lease, with annual escalation determined by the higher of 2.0% or the Consumer Price Index (CPI), capped at 3.0%," said the REIT in the press release.
VICI will utilize cash reserves and partial settlement of forward equity sales to bankroll the Venetian revamps.
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Source: www.casino.org
