VICI Properties Shells Out $508M for Las Vegas Hotel

By Scott Baltic

Caesars Palace

VICI Properties has completed the $507.5 million purchase, subject to a leaseback agreement, of the Octavius Tower at Caesars Palace in Las Vegas. The purchase, from Caesars Entertainment Corp., used available cash.

Caesars will continue to operate Octavius Tower under the terms of an existing ground lease until the Caesars Palace Las Vegas lease is amended to incorporate the Octavius Tower ground lease, which will happen concurrently with the closing of Harrah’s Philadelphia. The annual rent payment to VICI for the Octavius Tower will be $35 million.

The deal consummates part of a Letter of Intent and subsequent definitive agreement between VICI and Caesars. In brief, VICI will acquire the land and real estate of Harrah’s Philadelphia for a net cash consideration of $82.5 million. That and certain modifications to the lease agreements are expected to close during the fourth quarter. VICI did not reply to Commercial Property Executive’s request for additional information.

The Las Vegas hotel and casino complex totals more than 8.5 million square feet and features 3,980 guest rooms, convention and meeting facilities, the 4,300-seat Colosseum entertainment venue, a variety of restaurants, lounges and bars, extensive retail space, as well as spa and swimming facilities.

The 668-room Octavius Tower opened in January 2012 as part of an $860 million expansion at Caesars Palace. The property’s five other guest room towers are Augustus (which shares a lobby with Octavius), Julius (originally Roman), Nobu (formerly Centurion), Forum and Palace.

An even bigger transition

This sale-leaseback traces back to VICI’s October 2017 spinoff as the real estate arm of Caesars Entertainment Operating Co., a subsidiary of Caesars Entertainment Corp. Styling itself as an “experiential” REIT, VICI currently has a nationwide portfolio encompassing 20 gaming facilities totaling more than 37 million square feet, about 15,000 hotel rooms and more than 150 restaurants, bars and nightclubs. 

VICI also owns four championship golf courses and 34 acres of undeveloped land adjacent to the Las Vegas Strip.

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