Century Casinos has reached a definitive agreement with VICI Properties, a leading real estate investment trust (REIT), to sell the real estate assets of four properties in Alberta, Canada, for a total purchase price of $164.4 million (CA$221.7 million).
Assets Sold and Terms of the Agreement
The four properties included in the agreement are Century Casino & Hotel Edmonton, Century Casino St. Albert, Century Mile Racetrack and Casino, and Century Downs Racetrack and Casino. As part of the deal, VICI Properties will become the owner of these properties, while Century Casinos will maintain operational control through a master lease agreement.
The master lease encompasses a 15-year initial base, with a mutually agreed-upon extension set to begin upon closing of the sale. The transaction is subject to the usual regulatory approvals and closing conditions and is anticipated to be completed in the second half of 2023.
Strategic Financial Flexibility and Future Plans
Erwin Haitzmann and Peter Hoetzinger, co-chief executive officers of Century Casinos, expressed their satisfaction with the partnership with VICI Properties in Canada. The sale of these assets will unlock the real estate value of Century Casinos’ Canadian properties while allowing them to continue their Canadian operations. This transaction provides Century Casinos with enhanced financial flexibility as they continue to expand and grow.
The sale proceeds are expected to be allocated to fund improvements at the Nugget Casino Resort and for general corporate purposes. The company is also exploring the option to utilize some of the proceeds to pay down debt under their credit agreement and possibly return funds to shareholders through stock repurchases or a special dividend. Century Casinos remains committed to evaluating the optimal use of its capital resources.
Background and Recent Financial Performance
In April, Century Casinos successfully completed the acquisition of the Nugget Casino Resort’s operations from Marnell Gaming for approximately $100 million. This acquisition followed their purchase of 50% of the membership interests in Smooth Bourbon, which owns the land and building on which the Nugget is situated, a year earlier.
In terms of financial performance, Century Casinos reported a 5.3% increase in net operating revenue for the first quarter of 2023 compared to the same period in the previous year. Adjusted EBITDA rose by 9% to reach $26.1 million, while the net loss attributable to shareholders decreased significantly to $1.2 million. Their earnings from operations also demonstrated substantial growth, increasing by 41%.
Gaming revenue constituted the majority of Century Casinos’ operating revenue, at $94.2 million, followed by $5.7 million from food and beverages, and $3.3 million from pari-mutuel, sports betting, and iGaming. Hotel and other revenue accounted for the remaining portion of their revenue mix. These positive financial indicators illustrate the company’s continued strength and growth within the industry.
Century Casinos’ strategic decision to sell its real estate assets in Alberta represents a significant step towards financial flexibility and future growth opportunities. The partnership with VICI Properties ensures that the company can continue to operate these properties while leveraging their real estate value. With a strong financial performance and a commitment to shareholder value, Century Casinos is well-positioned for further expansion and development.