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Caesars Entertainment enters into agreements with VICI

12 Jul 2018

(PRESS RELEASE) -- Caesars Entertainment Corporation today announced it has entered into definitive purchase and sale agreements related to the previously announced acquisition by VICI Properties Inc. of two real estate assets owned by Caesars and modifications to certain of the lease agreements between the two companies. The various strategic transactions will support Caesars' growth strategies and continue to build on its strong working relationship with VICI.

"These agreements with VICI unlock more than $500 million in value from our real estate assets to support value-adding growth opportunities and reduce the volatility of our future rent payments, demonstrating our commitment to create value for our shareholders while maintaining financial discipline," said Mark Frissora, President and Chief Executive Officer of Caesars Entertainment.

The Purchase Agreements provide for VICI's acquisition of Caesars' real estate assets associated with the Octavius Tower at Caesars Palace Las Vegas (CPLV) for $507.5 million in cash and Caesars' real estate assets associated with Harrah's Philadelphia for $82.5 million in cash. The net proceeds for the Harrah's Philadelphia transaction reflect a purchase price reduction for the value of certain lease modifications and other aspects of the transactions. Caesars will continue to operate the Octavius Tower under the current terms of the long-term lease agreement between both companies relating to CPLV and will lease Harrah's Philadelphia from VICI pursuant to the existing long-term lease agreement relating to other domestic properties. The Octavius Tower transaction closed on 11 July 2018, and proceeds from the transaction will support the closing of Caesars' acquisition of Centaur Holdings, LLC expected to take place in mid-July.

In connection with the Harrah's Philadelphia transaction, Caesars and VICI will consummate certain lease modifications to the CPLV and Non-CPLV leases. The modifications are intended to bring the lease terms into alignment with other market precedents and the long-term performance of the properties. This will result in near-term increases in rent for VICI as well as the addition of new assets, while moderating changes to Caesars' long-term rent payments and potential significant volatility in Caesars' rent payments to VICI. The modifications are also expected to create additional flexibility to facilitate Caesars' development ambitions on the East Side of the Las Vegas Strip by removing certain impediments associated with those plans. The Harrah's Philadelphia transaction and lease modifications are expected to close during the fourth quarter of 2018, subject to customary closing conditions and government and third party approvals.
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