VICI Properties (NYSE: VICI) announced today that іt amended its master lease agreement with Pure Canadian Gaming Corp. due tо the acquisition оf that company’s operating assets by Indigenous Gaming Partners (IGP).
Details Of VICI’s Deal With 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 an 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, an 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.
Who Is Indigenous Gaming Partners?
IGP is a newly formed entity designed to acquire gaming assets across North America and is 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 four Pure Casino properties appears to be IGP’s first, and it’s partnering with Sonco Gaming to manage the gaming venues. Sonco currently manages four gaming properties in its home country of Canada, along with 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.
Canada’s Relevance In VICI’s Strategy
The aforementioned Canadian casinos are smaller in size compared to most of the comparable venues VICI owns in the US, but Canada is still significant to the REIT’s broader investment strategy because it provides geographic diversification.
Currently, VICI relies on the Las Vegas Strip for most 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.
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