Caesars' Leftover Landlord Is Now a $50 Billion Company
Created in Caesars' 2017 bankruptcy, Vici now owns the land under its former parent and other casinos.
The Wall Street Skinny · The Financial Times' Go-To Reporter on All Things Private Equity & Private Credit TELLS ALLA real estate company created as an afterthought in Caesars' 2017 bankruptcy is now worth about $50 billion.
The bankruptcy split Caesars in two. One company, the operator, runs the casinos in Las Vegas and around the country. The other, called Vici for veni, vidi, vici, owns the land and buildings and rents them back.
Vici is a real estate investment trust, a company that owns property, pays no corporate tax, and pays a big dividend. Caesars itself has an equity value of about $5 billion to $7 billion and carries about $15 billion in debt and lease obligations. It pays Vici more than $1 billion a year in rent.
Vici also owns the ground under the Venetian and Palazzo, which are owned by Apollo, one of Caesars' former private equity owners, and rented back to their operator. It also owns bowling alleys and other properties, and rents to Caesars and others.
Questions people ask
What exactly is a REIT?
A real estate investment trust is a company that owns income producing property and must pay out most of its profits as dividends. In exchange, it generally pays no corporate income tax. Investors buy it for steady, dividend heavy returns rather than fast growth.
Why separate the casino from the land underneath it?
Casino buildings sit on prime land but generate lumpy profits, so investors often value the two parts differently. By separating them, the operator can focus on gambling, hotels, and restaurants, while the landlord can borrow cheaply against stable rent. Similar splits are common with retailers, restaurants, and hospitals.
Does Caesars still own its casinos?
No. Caesars mostly leases its former buildings back from Vici, and pays more than $1 billion a year to do so. That lease obligation works much like debt, on top of about $15 billion in loans, bonds, and capitalized rent that a buyer would have to reckon with.