Century Casinos will acquire the operations of Isle Casino Cape Girardeau, Lady Luck Caruthersville and Mountaineer Casino, Racetrack and Resort for approximately $107 million.
Simultaneous with the closing of the transaction, VICI Properties Inc. will acquire the real estate assets of the three properties for approximately $278 million, and the company will enter into a triple net lease agreement with VICI for the three casino properties. The lease will have an initial annual rent of approximately $25.0 million and an initial term of 15 years, with four five-year renewal options. The pro-forma rent coverage ratio at the acquired portfolio level is 2.1x.
The purchase price represents an implied trailing 12 month pro-forma earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of 4.1x for the three casinos. The multiple excludes any potential cost synergies and operational improvements. The acquisition is expected to meaningfully enhance the company’s free cash flow as well as be immediately accretive to earnings.
The company will finance the $107 million purchase with a new credit facility that is anticipated to be issued by Macquarie Capital.
“This transaction further highlights our commitment to enhancing shareholder value,” Erwin Haitzmann, co-chief executive officer of Century Casinos said. “Cape Girardeau, Caruthersville and Mountaineer expand the strategic diversity of Century Casinos with attractive assets in strong, stable markets. The expected increase to our free cash flow will allow us to remain well positioned to reduce leverage and evaluate additional strategic growth opportunities,”
Isle Casino Cape Girardeau is located in Cape Girardeau, MO, approximately 120 miles south of St. Louis.