Caesars Entertainment is selling its Harrah’s Philadelphia casino and racetrack property in Chester. However, the property won’t exactly be changing hands.
The US casino giant announced this week it had struck another sale and lease-back deal with bankruptcy spin-off real estate investment trust (REIT) VICI Properties Inc. This deal will sell Harrah’s Philadelphia for $82.5 million in cash and then lease it back. As such, Caesars will continue to run the casino and racetrack.
Additionally, a similar deal was struck to sell and lease back its Octavius Tower at Caesars Palace in Las Vegas, Nevada for $507.5 million in cash.
The Harrah’s Philadelphia transaction will close in the fourth quarter of this year.
VICI Properties and Caesars
VICI Properties was born out of Caesars’ Chapter 11 bankruptcy reorganization in 2015. Caesars split into two companies, a REIT taking ownership of its casinos, and an operating company that continued to manage them. REIT’s are designed to allow small investors into large real estate investments and provide certain tax breaks.
At the time, some members of US Congress members opposed the reorganization, claiming that allowing Caesars to create a REIT amounted to giving a taxpayer-funded subsidy to one of the largest casino companies in the country.
However, the spin-off went ahead regardless. VICI Properties launched in 2017 with ownership of 19 Caesars casino properties, including its flagship Caesars Palace Las Vegas.
Now, VICI Properties calls itself one of the country’s largest owners of gaming, hospitality, and entertainment destinations.
The company struck another sale and lease-back deal for Harrah’s Las Vegas in December 2017 and its portfolio now includes 20 casino properties. The properties are all leased to Caesars Entertainment and continue to operate under brands including:
In fact, VICI Properties now boasts 36.6 million square feet of space, 14,500 hotel rooms and more than 150 restaurants, bars and nightclubs.
MGM Growth Properties made an estimated $5.9 billion offer to buy the company in January of this year. Howeve, VICI’s board rejected the offer. VICI went public in February 2018, raising $1.2 billion through its initial public offering on the New York Stock Exchange.
Harrah’s Philadelphia opened as Harrah’s Chester in 2006. It was originally a harness racing track overlooking the Delaware River. However, slot machines were added within the first four months. Construction cost an estimated $400 million.
The casino and racetrack sit just off I-95. Additionally, it is only a half-hour drive from the center of Philadelphia.
Harrah’s Chester became Harrah’s Philadelphia in 2012. Additionally, three new restaurants opened at that time and the property launched a summer concert series.
The casino now features more than 2,800 slots and 125 table games. Additionally, it houses a World Series of Poker-branded poker room. It is the fourth-largest grossing casino in Pennsylvania. The 5⁄8 mile racetrack features a limestone-based surface.
In connection with the sale of Harrah’s Philadelphia to VICI Properties, Caesars will face some near-term rent increases.
Caesars Entertainment calls itself the world’s most diversified casino-entertainment provider. In fact, it now operates 47 casinos in 13 states and five different countries.
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