VICI Properties Inc. Completes Acquisition of 38 Bowling Entertainment Centers in Sale-Leaseback Transaction With Bowlero Corp.
October 19 2023 - 4:15PM
Business Wire
- Represents VICI’s Inaugural Sale-Leaseback
Transaction in Family Entertainment Sector with a Publicly Traded
Operator Redefining the Bowling Category -
- Further Diversifies VICI’s Tenant Base and
Geographic Reach to Drive Future Potential Growth and Value
Creation -
- Enhances VICI’s Embedded Growth Pipeline
-
- Transaction Expected to be Immediately
Accretive to AFFO per Share -
VICI Properties Inc. (NYSE: VICI) (“VICI Properties,” “VICI” or
the “Company”), an experiential real estate investment trust, today
announced that it has acquired the real estate assets of 38 bowling
entertainment centers (the “Bowlero Portfolio”) from Bowlero Corp.
(NYSE: BOWL) (“Bowlero”) in a sale-leaseback transaction for an
aggregate purchase price of $432.9 million. Bowlero is a global
leader in bowling entertainment, media, and events and is the
largest operator of bowling centers in North America.
Simultaneous with the closing of the transaction, VICI
Properties entered into a triple-net master lease agreement with
Bowlero (the “Lease”). The Lease will have an initial total annual
rent of $31.6 million, representing an acquisition cap rate of
7.3%, and an initial term of 25 years, with six 5-year tenant
renewal options. Rent under the Lease will escalate at the greater
of 2.0% or CPI (subject to a 2.5% ceiling). The obligations of the
tenants under the Lease are guaranteed by Bowlero Corp.
The transaction further enhances VICI’s embedded growth pipeline
with a right of first offer for a term of eight years to acquire
the real estate of current or future Bowlero properties should
Bowlero elect to enter into a sale-leaseback transaction.
Strategic Merits
- Inaugural family entertainment experiential real estate
acquisition: The Bowlero business model meets each of VICI’s
investment criteria – lower than average cyclicality, low secular
threat, proven durability, and favorable supply/demand dynamics. As
a market innovator, Bowlero has redefined the programming and
economics of the bowling experience, thus aligning with VICI’s
focus on partnering with best-in-class, growth-minded experiential
operators with a demonstrated track record of enduring growth.
- New partnership with market-leading company and management
team: The Lease is bolstered by a parent guarantee from a
publicly traded company (NYSE: BOWL) and by Bowlero’s market
leadership as the largest bowling operator in North America with
350 operating centers, a footprint more than 6x greater than its
next largest competitor, and a differentiated strategy that
attracts nearly 30 million guests each year.
- Diversifies tenant base and geographic reach: The
acquisition of the Bowlero Portfolio expands VICI’s portfolio with
38 bowling entertainment centers across 17 states, representing 11
new states for VICI – seven of which do not currently have
commercial casino gaming operations. Based on annualized rent as of
October 1, 2023, Bowlero will represent 1% of VICI’s rent roll.
Bowlero is VICI’s 12th tenant.
- Enhances embedded growth pipeline: VICI has a right of
first offer for a term of eight years for future sale-leasebacks as
Bowlero continues revamping the bowling landscape by executing its
consolidation and conversion growth strategy, unlocking opportunity
for potential future VICI acquisitions.
- Immediately accretive to AFFO per share: The transaction
is expected to provide immediate accretion to AFFO per share.
Key Comments
- Sector Initiation – John
Payne, President & COO of VICI Properties: “We are excited to
announce our entry into the family entertainment sector, a $15+
billion experiential category, with a best-in-class, growth-minded
operator. At VICI, we seek to invest in non-commodity real estate
centered on experiences benefiting from long-term secular
tailwinds, and Bowlero’s track record of growth and innovation in a
resilient experiential sector aligns well with our investment
framework. We are proud to be a key real estate and capital partner
for the Bowlero team.”
- Innovative Operating
Partner – David Kieske, EVP & CFO of VICI
Properties: “Bowlero’s success represents a standout roll-up story
in a compelling space with ample room for consolidation, margin
expansion, and economic densification. We are thrilled to add
another strong, publicly traded operator to our tenant roster, and
VICI looks forward to supporting our tenant and expanding our
partnership along the way.”
- Foundational Real Estate
Partnership - Thomas Shannon, Chairman, Founder, and CEO
of Bowlero: “This transaction marks the beginning of a long-term,
valuable partnership with VICI. John, David and team have been
fantastic partners, and the support of VICI’s capital gives us the
firepower to continue advancing our strategic directives. We look
forward to growing the relationship over the coming years.”
The transaction was funded through cash on hand, partial
settlement of outstanding forward equity sale agreements, and a
combination of units in a newly formed VICI subsidiary issued to
Bowlero. After funding this transaction, VICI maintains ample
liquidity, including $431 million in cash and cash equivalents,
$248 million of estimated net equity proceeds available upon
settlement of outstanding forward sale agreements, and $2.3 billion
of availability under the revolving credit facility.
J.P. Morgan acted as exclusive financial advisor and Hogan
Lovells US LLP and Kramer Levin Naftalis & Frankel LLP served
as legal advisors to VICI Properties on the transaction.
In addition to this release, the Company has furnished a
Transaction Overview presentation and video. Both are available on
VICI’s website in the “Investors” section, under the menu heading
“Events & Presentations.” For the presentation, please visit
https://investors.viciproperties.com/events-and-presentations/
presentations. For the video, please visit
https://investors.viciproperties.com/events-and-presentations/
event-archive.
About VICI Properties
VICI Properties Inc. is an S&P 500® experiential real estate
investment trust that owns one of the largest portfolios of
market-leading gaming, hospitality and entertainment destinations,
including Caesars Palace Las Vegas, MGM Grand and the Venetian
Resort Las Vegas, three of the most iconic entertainment facilities
on the Las Vegas Strip. VICI Properties owns 92 experiential assets
across a geographically diverse portfolio consisting of 54 gaming
properties and 38 non-gaming experiential properties across the
United States and Canada. The portfolio is comprised of
approximately 125 million square feet, features approximately
60,300 hotel rooms and approximately 500 restaurants, bars,
nightclubs and sportsbooks. Its properties are occupied by industry
leading gaming, leisure and hospitality operators under long-term,
triple-net lease agreements. VICI Properties has a growing array of
real estate and financing partnerships with leading non-gaming
experiential operators, including Bowlero, Great Wolf Resorts,
Cabot, Canyon Ranch and Chelsea Piers. VICI Properties also owns
four championship golf courses and 33 acres of undeveloped and
underdeveloped land adjacent to the Las Vegas Strip. VICI
Properties’ goal is to create the highest quality and most
productive experiential real estate portfolio through a strategy of
partnering with the highest quality experiential place makers and
operators. For additional information, please visit
www.viciproperties.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. You can identify these
statements by our use of the words “assumes,” “believes,”
“estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,”
“will,” and similar expressions that do not relate to historical
matters. All statements other than statements of historical fact
are forward-looking statements. You should exercise caution in
interpreting and relying on forward-looking statements because they
involve known and unknown risks, uncertainties, and other factors
which are, in some cases, beyond VICI’s control and could
materially affect actual results, performance, or achievements.
Among those risks, uncertainties and other factors are risks that
VICI may not achieve the benefits contemplated by the acquisition
of thirty-eight bowling entertainment centers from Bowlero Corp.
(“Bowlero“), including any expected accretion or the amount of any
future rent payments (including the anticipated rent escalations),
entry into any future sale lease-back or other transactions between
VICI and Bowlero, including pursuant to VICI’s right of first
offer, or the anticipated benefits thereof. Additional important
risk factors that may affect VICI’s business, results of operations
and financial position are detailed from time to time in VICI’s
filings with the Securities and Exchange Commission. VICI does not
undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise, except as may be required by applicable law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231019022395/en/
Investors: Investors@viciproperties.com (646) 949-4631 Or David
Kieske EVP, Chief Financial Officer DKieske@viciproperties.com
Moira McCloskey SVP, Capital Markets
MMcCloskey@viciproperties.com
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