Vici Properties, the real estate trust that owns Caesars Entertainment Corporation is planning an initial public offering (IPO) to help fund its efforts to balance the books. The Caesars brand is best-known for its many casinos and golf courses but the company has gone through troubled times in the recent past and has just come out of bankruptcy proceedings.
Vici Properties was formed from the reorganization of the company, giving them ownership of the many holdings of the company and the responsibility for paying off the massive debt.
Caesars is more than $4 billion in debt at this point of time. To help pay this debt, Vici is buying up Caesars properties so that the money can be used to pay off any remaining liabilities. This has caused the company to go on a buying spree recently.
Vici filed documents earlier this month with the Securities and Exchange Commission, stating that it will be proceeding with an IPO on the New York Stock exchange and have its shared traded under the VICI symbol. The company is yet to confirm a potential date as to when the IPO will be opened.
The latest purchase was Harrah's Las Vegas which Vici bought for $1.14 billion. Caesars will still be responsible for running operations at the property and will be paying an annual fee to Vici of $87.4 million to further help with the debt payments. Currently, Vici has control of 19 former Caesars properties which gives them holdings in nine states.
The main fuel for these purchases is the shares that they are offering. The reason for creating Vici was to give anyone holding a debt from Caesars shares as initial payment. Private offerings were then made for shares to raise funds for the purchase of properties like Harrah's Las Vegas. They managed to sell 54 million new shares at $18.50 each. As it stands, the trust has 300 million shares, with a current total value of around $6 billion. Several investment companies have bought many of these shares. This includes Soros Fund Management, Canyon Capital Advisors and Elliott Associates among others. All of them currently own at least 5 percent of shares.
This move by Caesars is the latest strategy by US casino operators to streamline operations. Real estate investment trusts allow for quick cash generation and a way for operators to avoid liabilities. Vici is the third of these real estate trusts to be created. now operating. First, Penn National created Gaming and Leisure Properties to handle its properties and the second was MGM Resorts International creating MGM Growth Properties, which ran its own IPO last year.