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Vici making progress toward Venetian, Palazzo, Sands Expo buy

Executives with the real estate investment trust involved in the deal to acquire The Venetian, Palazzo and Sands Expo & Convention Center say they’re making progress toward closing the deal as planned by early 2022.

Officials with New York-based Vici Properties Inc., an REIT affiliated with Caesars Entertainment Corp., also told investors in an earnings call Thursday that they are branching out into the water park business.

Vici announced in March that it is partnering with Apollo Global Management Inc. to buy The Venetian, Palazzo and Sands Expo real estate for $6.25 billion.

Under terms of the deal, Vici would pay $4 billion in the transaction and would receive the real estate on which the resort sits. Apollo would manage the property.

David Kieske, chief financial officer and treasurer for Vici, said during the earnings call that the company would use $2.4 billion in equity and go to the debt market in the fall to finance the remaining $1.6 billion of the transaction.

When the deal closes, Vici will collect $250 million a year in rent on the property.

During the call, executives also detailed the company’s June announcement that it has entered into a $79.5 million loan agreement with Great Wolf Lodge Maryland in Perryville, Maryland, to build a 48-acre indoor water park. The loan has a three-year term with two 12-month extension options and bears an 8 percent annual interest rate.

The terms also give Vici up to five years to provide up to $300 million in financing inclusive of the $79.5 million initial loan to fund Great Wolf’s domestic and international indoor water park resort pipeline.

An analyst applauded the Vici strategy in a note to investors.

“Vici is positive on the water park industry, terming it essentially ‘casinos without gaming,’” wrote Barry Jonas of Atlanta-based Truist Securities Inc. “This marks Vici’s second loan relating to non-gaming, though we believe their ultimate goal is a sale leaseback of these or other non-gaming assets.”

Edward Pitoniak, CEO of Vici, told investors on the call that while it took several years, Vici and investors have determined that casino leaseback deals are valuable because casino footprints are large and have quality assets.

Vici had earnings results that surpassed analysts’ expectations. The company reported net income of $300.7 million, 54 cents a share, on revenue of $376.4 million for the quarter that ended June 30. That compares with net income of $229.4 million, 47 cents a share, on revenue of $257.9 million for the same quarter a year earlier.

Vici shares, traded on the New York Stock Exchange, closed down 48 cents, 1.5 percent Thursday, to $30.99 a share in light trading.

The Review-Journal is owned by the family of Dr. Miriam Adelson, the majority shareholder of Las Vegas Sands Corp., which operates The Venetian/Palazzo/Sands Expo & Convention Center.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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