Century Casinos Inks Sale Leaseback Deal for Canadian Portfolio

Century Casinos, a major NA gambling company, has penned a definitive sale-leaseback deal with VICI Properties. The deal will see the former company sell the assets of four of its properties in Alberta, Canada.

The properties in question are Century Casino & Hotel Edmonton, Century Casino St. Albert and Century Mile Racetrack and Casino in Edmonton, Alberta and Century Downs Racetrack and Casino (“Century Downs”) in Calgary, Alberta.

The aggregate purchase price of the deal is $164.4 million in USD (based on the exchange rates at the time of the deal). The purchase price includes $142.6 million to be paid to Century Casinos’ subsidiaries and $21.8 million to acquire the fee simple real estate interest in Century Downs.

Century Casinos forecasts retaining around $114.6 million of the purchase price.

The Deal Will Be Added to the Existing Master Lease

The four properties, referred to in the deal as the Century Canadian Portfolio, will be added to the existing triple-net master lease agreement between Century Casinos and VICI Properties. As a result, the annual rent will increase by $12.8 million, which translates into an implied acquisition capitalization rate of 7.8%.

Meanwhile, the property-level rent coverage ratio under the Master Lease agreement will be around 2.0x. In addition, the term of the Master Lease will be extended to 15 years after the closing of the latest agreement.

Century Casinos will guarantee its obligations under the lease.

The deal, subject to regulatory approvals, is expected to close in the second half of the year.

The Higher-ups Are Excited about the Arrangement

Century Casinos’ co-chief executive officers, Erwin Haitzmann and Peter Hoetzinger, released a statement on the new sale-leaseback, saying that they are pleased to extend their partnership with VICI Properties.

The two executives said that the transaction will “unlock the real estate value” of the operator’s Canadian portfolio. At the same time, it will allow the company to grow its local footprint, while providing it with improved financial flexibility.

The co-CEOs announced their intentions to continue making the most out of Century Casinos’ capital, teasing some of their future plans:

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.

Erwin Haitzmann and Peter Hoetzinger, co-CEOs, Century Casinos

Century Casinos currently shared data concerning its financial performance in 2022, highlighting a double-digit growth.