NEW YORK--(BUSINESS WIRE)--VICI Properties Inc. (NYSE: VICI), an experiential real estate investment trust, today announced it has completed the previously disclosed transactions with Caesars Entertainment Corporation (NASDAQ:CZR) to acquire, and lease back, all of the land and real estate assets associated with Harrah’s Philadelphia and to modify the Company’s Formation Leases and the HLV Lease, each as defined below.

Harrah’s Philadelphia was acquired for a purchase price of $241.5 million, which was reduced by $159.0 million to reflect the aggregate net present value of the Lease Modifications, resulting in a net cash consideration of $82.5 million, excluding transaction costs. The Company funded the net purchase price using available cash. The Harrah’s Philadelphia property provides for initial annual rent of $21.0 million, which is included in the Non-CPLV Lease (as defined below) pursuant to the Lease Modifications. Additionally, the Non-CPLV Lease and Joliet Lease were amended to provide annual rent escalators of 1.5% for lease years two through five, which will commence retroactive to November 1, 2018.

In connection with the Lease Modifications, the CPLV Lease was modified to include Octavius Tower at Caesars Palace, which is owned by the Company and leased back to a subsidiary of Caesars. The Company previously acquired Octavius Tower on July 11, 2018 for $507.5 million, whereupon VICI Properties began receiving $35.0 million in annual rent pursuant to a separate ground lease.

Edward Pitoniak, Chief Executive Officer of VICI Properties said, “The VICI and Caesars teams worked very productively together to complete this important and value-creating transaction for both companies. Adding Harrah’s Philadelphia to our growing portfolio of best in-class gaming real estate strengthens our presence in the attractive Mid-Atlantic gaming market. In addition, guided by a deep understanding of the needs and goals of our tenants, we amended the original lease agreements to be better aligned with the strategic interests of both parties. For VICI shareholders, these changes significantly improve our same-store rent growth in the near-term, protect against future volatility in our rental income over the long-term and, most importantly, incentivize our tenant to invest capital into the real estate to grow and strengthen their own business.”

Mr. Pitoniak continued, “In addition to the $35.0 million of annual rent we began receiving in July from the acquisition of Octavius Tower, this transaction adds an additional $21.0 million in initial annual rent from Harrah’s Philadelphia and an additional $7.1 million in the form of incremental annual rent escalators for the first twelve months post the Lease Modifications. Thus, for a net cash payment of $590.0 million, we are adding $63.1 million in annual rent at a very attractive net cap rate and position VICI Properties with an attractive 2019 embedded growth profile.”

Harrah’s Philadelphia

Harrah’s Philadelphia was built in 2006 and is benefiting from significant property enhancements completed in 2017. Harrah’s Philadelphia is located along the waterfront in Chester, Pennsylvania. The property comprises 2.0 million square feet of space featuring approximately 2,450 slot machines, 110 table games, several bars and restaurants and parking garages. Caesars will lease from VICI Properties the real estate associated with Harrah’s Philadelphia under the Non-CPLV Lease. Caesars’ initial annual lease payment related to Harrah’s Philadelphia will be $21.0 million in the first year and will be subject to contractual annual increases thereafter in accordance with the Non-CPLV Lease.