Century Casinos agrees $221.7m deal to sell real estate assets of Canadian casinos

Proceeds of the sale are to be used to upgrade The Nugget Casino Resort in Nevada

Century Casinos has confirmed it has entered into a definitive agreement for subsidiaries of VICI Properties to acquire the real estate assets of its four casino locations in Canada.

The Colorado-based firm operates a total of 10 casinos across the US and Canada, with four situated in the Canadian province of AlbertaCentury Casino Edmonton, Century Casino St. Albert, Century Mile Racetrack and Casino, and Century Downs Racetrack and Casino (Calgary).

Vici Properties has now agreed to acquire the real estate assets of the Century Canada Portfolio for an aggregate purchase price of $221.7m in cash, which includes $192.3m to be paid to subsidiaries of Century Casinos and approximately $29.4m to acquire the fee simple real estate interest in Century Downs.

Century Casinos anticipates retaining approximately $154.5m of the purchase price after giving effect to the purchase of the Century Downs land, selling expenses, Canadian and US taxes and proceeds to be paid to the minority owners of Century Downs.

“We are pleased to extend our good partnership with VICI to our Canada portfolio,” said Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos, in a joint statement.

“This transaction unlocks the real estate value of our Canadian properties while continuing our Canadian operations and provides us with greater financial flexibility as we continue to grow.”

Haitzmann and Hoetzinger also cited the company’s recent purchase of the operating business of The Nugget Casino Resort in Nevada, with upgrades on the agenda in that location.

“We intend to use the sale proceeds to fund improvements at the Nugget and for general corporate purposes. We are also looking at the potential to apply some proceeds to paydown debt under our credit agreement and/or to return funds to shareholders through stock repurchases and/or a special dividend. We continue to evaluate the optimal use of our capital.”

The development comes a week after publication of Century Casinos’ Q1 report, which revealed its Canadian segment generated $22.4m in revenue during the first three months of 2023, an increase of 1.2% ($2.1m) on Q1 2022.

Those results were driven primarily by an 18.8% ($2.6m) increase in Edmonton, where it has three reporting units – Century Casino & Hotel, Century Casino St. Albert, and Century Mile Racetrack and Casino – while Century Downs Racetrack and Casino (Calgary) reported net operating revenue of $6.2m, down 7.5% ($0.5m) on last year.

Meanwhile, simultaneous with the closing of the transaction – expected to be in the second half of 2023 – the Century Canadian Portfolio will be added to the existing triple-net master lease agreement between subsidiaries of VICI and subsidiaries of the Century Casinos, with annual rent set to increase by $17.3m, representing an implied acquisition capitalization rate of 7.8%.

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