Posted on: December 10, 2024, 06:23h.
Last updated on: December 11, 2024, 09:50h.
VICI Properties (NYSE: VICI) announced Tuesday that it amended its master lease agreement with Pure Canadian Gaming Corp., owing to the acquisition of that company’s operating assets by Indigenous Gaming Partners (IGP).
In January 2023, VICI acquired the real estate assets of Pure Casino Edmonton, Pure Casino Yellowhead, Pure Casino Calgary, and Pure Casino Lethbridge. At that time, the real estate investment trust (REIT) and the gaming company entered into a triple-net master lease agreement with annual rent of $16.1 million.
The Pure Canadian master lease will remain unchanged, including a base term of 25-years with four 5-year tenant renewal options, escalation of 1.25% per annum in lease year 3, with escalation equal to the greater of 1.5% and Canadian CPI (capped at 2.5%) starting in lease year 4, and a minimum capital expenditure requirement equal to 1.0% of annual net revenue,” according to a statement.
The agreement is in its second year with the escalators going into effect on February 1, and it pertains to each of the aforementioned Canadian casinos.
IGP is a newly formed entity designed to acquire gaming assets across North America and it’s 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.
The acquisition of the quartet of Pure Casino properties appears to be IGP’s first, and it’s partnering with Sonco Gaming to run the gaming venues. Sonco currently manages four gaming properties in its home country of Canada and the Maxim Casino in London.
As part of the new agreement, VICI gained rights of first refusal on future IGP sales of gaming real estate, should such transactions emerge.
“In connection with entering into the amendment to the PURE Canadian master lease, VICI received a 5-year right of first offer (ROFO) on future sale-leaseback transactions. Any additional properties acquired pursuant to the ROFO will be added to the master lease,” according to the press release.
The aforementioned Canadian casinos are dwarfed in size by most of the comparable venues VICI owns in the US, but the Great White North is still pertinent to the REIT’s broader investment thesis because the country offers the landlord geographic diversification.
Today, VICI relies on the Las Vegas Strip for the bulk of its rental income and revenue. There, VICI owns the real estate assets of Caesars Palace, the Venetian, and nearly all MGM casino hotels.
The real estate firm has nearly a dozen gaming tenants, including those mentioned above as well as Eastern Band of Cherokee Indians, Hard Rock International, and Penn Entertainment, among others.
