VICI Properties (NYSE: VICI) unveiled on Tuesday an amendment to its master lease agreement with Pure Canadian Gaming Corp. following their sale of operational assets to Indigenous Gaming Partners (IGP).
VICI acquired the real estate holdings for Pure Casino Edmonton, Yellowhead Casino Calgary and Lethbridge casinos in January 2023 through acquisition, creating a triple-net master lease agreement between VICI’s real estate investment trust (REIT) and gaming entity with annual rent set at $16.1 Million per annum.
Pure Canadian master lease terms remain as previously outlined, with its foundational term set for 25 years and four 5-year renewal options provided to tenants. Furthermore, annual increases will begin increasing by 1.255% from year three onwards until hitting 2.5% as determined by Canadian CPI inflation index; furthermore stipulating minimum capital expenditure equaling 1.0% of annual net revenue is also part of these terms.
Now in its second year, this agreement features escalation clauses which will take effect as of February 1 and cover all Canadian casino properties.
About Indigenous Gaming Partners
IGP represents a new venture founded with the purpose of purchasing gaming assets across North America. Comprised of five tribal nations (Glooscap First Nation, Millbrook First Nation, Annapolis Valley First Nation, We’koqma’q L’nue’kati and Paqtnkek Mi’kmaw Nation), its consortium was organized for this endeavor.
IGP’s acquisition of four Pure Casino properties marks its initial entry into this sector, with Sonco Gaming serving as its operational partner – it already operates four gaming venues within Canada as well as London’s Maxim Casino.
VICI and IGP have entered into this new alliance and secured VICI rights of first refusal on any future sales of gaming real estate by IGP if such transactions arise.
VICI was awarded a five-year right of first offer (ROFO) on upcoming sale-leaseback transactions as part of an amendment to PURE Canadian master lease, any properties acquired during that time will then become part of said master lease agreement.
Significance of Canada in VICI’s Portfolio
VICI’s Canadian casinos bring immense value to VICI’s investment portfolio and contribute significantly to geographic diversity.
VICI derives most of its rental income and revenue from holdings on the Las Vegas Strip, where they own land underlying iconic properties such as Caesars Palace and Venetian. Furthermore, MGM casino hotels represent an additional source.
Gaming tenants of Penn Entertainment include almost a dozen entities such as Eastern Band of Cherokee Indians, Hard Rock International, and Penn Entertainment.
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