- Rio All-Suite changes ownership, sold to Imperial Commpanies’ subsidiary
- Caesars will manage the property for the next two years
- WSOP will remain at the venue and host the upcoming event there
WSOP-hosting venue, the Rio All-Suite Hotel and Casino, has been sold to Imperial Companies, a real-state investor. The previous owner, Caesars Entertainment, will continue running and managing the property for another two years in exchange for $45 million per year in rent.
Caesars Sells Rio-All Suite Hotel
Caesars Entertainment has sold one of its flagship properties – the Rio All-Suite Hotel and Casino – to a real-estate investment company for the spectacular $516.3 million. As a result, an Imperial Companies’ firm will buy the property located near the Las Vegas Strip. Caesars doesn’t intend to haul operations overnight.
Instead, the casino operator will continue to run the Rio All-Suite property for another two years while paying $45 million in rent money. A possible extension of the lease into the third year is also possible when Caesars would need to pay $7 million.
Why Selling Now?
Caesars’ decision to sell off doesn’t come lightly, Caesars CEO Tony Rodio explained. Yet, the move was necessary so as to free up resources and allow the hospitality and casino operator company to focus its resources on the other properties in its portfolio. Here is what Mr. Rodio had to say specifically, commenting on the move:
This deal allows Caesars Entertainment to focus our resources on strengthening our attractive portfolio of recently renovated Strip properties and is expected to result in incremental EBITDA at those properties.
While the Rio property would no longer be part of the Creasers rewards program, the World Series of Poker (WSOP) will stay loyal to the venue and keep running the world’s largest poker tournament at the venue.
Strengthening the Portfolio
Caesars has been making headlines recently with a number of high-profile deals. In June, the company announced that it would be bought up by Eldorado Resorts for the staggering $17 billion. CDC Gaming Reports Howard Stutz described this move as one of the largest gaming deals.
The deal would see Eldorado’s 26 properties become part of Caesars’ 53-property portfolio, covering a total of over six countries and 13 states. Commenting on the occasion, Eldorado’s Tom Reeg had the following to say:
Together, we will have an extremely powerful suite of iconic gaming and entertainment brands, as well as valuable strategic alliances with industry leaders in sports betting and online gaming.
Eldorado’s buy-out was largely the masterplan of Carl Icahn, an activist investor, who had been actively pushing for the company to either merge with another gaming giant or be sold.
Reimagining the Property’s Potential
According to a SunTrust Bank gaming analyst, Barry Jonas, Imperial will most likely seek to bank on the potential of the property by introducing a number of non-gaming focused activities and add third-party partners.
While the contract includes a management option, Mr. Jonas doesn’t believe that it would be exercise. The only reason for the lease option to be featured was to let the new owner have enough time to re-develop the property, the SunTrust Bank analyst said.
Jefferies analyst David Katz commented on the deal, explaining that it had been necessary as Caesars since the Rio property was in a ‘desperate need capital improvements.