Penn National Gaming and Vici Properties have completed the previously announced $1bn deal to acquire Detroit’s Greektown Casino Hotel from Jack Entertainment.
Taking its US footprint to 42 properties in 19 jurisdictions, Penn secured the operating assets for approximately $300m, which coupled with the real estate investment trust’s $700m purchase of the land and real estate assets.
Simultaneous with the closing of this transaction, Penn National entered into a triple-net lease agreement with Vici for an initial 15-year term for approximately $55.6m per annum, with four 5-year tenant renewal options included.
Timothy Wilmott, Penn National’s chief executive officer, said of the acquisition: “We are pleased to be entering one of the nation’s largest regional gaming markets, and to be operating the only casino in the heart of the revitalised downtown Detroit area.
“We look forward to welcoming patrons from high profile nearby attractions, such as Comerica Park, Ford Field, Little Caesars Arena, the city’s theatre district, GM’s Renaissance Center and the Cobo Conference Center.
“We’re also excited to be adding the largest single property customer database to mychoice, our soon-to-be re-launched and enhanced player loyalty program.
“Our expanded scale will allow us to generate synergies over the first six quarters of operations, at which time we anticipate an OpCo purchase multiple of 6.3x projected annual run-rate adjusted EBITDA. With the expected increase to our free cash flow per share, we will remain well positioned to reduce lease-adjusted net leverage to 5.0x to 5.5x by the end of next year.”
First opening in 2000, Greektown features 100,000 square feet of casino space, approximately 2,700 gaming machines and 60 table games, a poker room, three restaurants, seven fast casual food outlets, four bars and a coffee shop.
John Payne, president and chief operating officer of Vici Properties, added: “The Greektown acquisition is our second transaction with Penn National, further solidifying our relationship with a best-in-class operator, and demonstrating our commitment to deliver portfolio income of the highest character and quality.
“In the past five months we have closed on three large-scale acquisitions, deploying $1bn in proceeds, while adding approximately $100m of annualised rent, and broadening our geographic diversity by expanding into two new jurisdictions.”