Jack Ohio Casino Sale
CINCINNATI -- Jack Entertainment will sell Jack Cincinnati Casino and Turfway park for $780 million pending approval, the company announced Friday.
CINCINNATI, OH (FOX19) - JACK Entertainment will sell JACK Cincinnati Casino and Turfway park for $780 million pending approval, the company announced Friday. Ohio’s casino regulator approved this week the proposed sale of JACK Cincinnati Casino to real estate investment trust VICI Properties, local news outlet Cincinnati CityBeats reported. Members of the Ohio Casino Control Commission voted to issue a three-year license to VICI, allowing the company to purchase the downtown Cincinnati casino for.
Hard Rock International and VICI Properties hope to complete the acquisition by year end. The deal would result in a third name change for Cincinnati's top-ranked largest casino property, which averaged nearly $17 million in monthly gaming revenue in 2018.
The property opened as a Horseshoe Casino in 2013 with about 1,700 employees. For the last 18 months, General Manager Chad Barnhill said the property has been operating with a staff of 'just under 1,000.'
Barnhill expects to continue working for Hard Rock International along with the rest of his team.
'Nothing changes,' Barnill said. 'All of our union agreements carry over with Hard Rock. Their seniority carries over. And nothing but upside with the Hard Rock brand coming in and what that means to increased visitation.'
The proposed sale ends months of speculation about a potential sale of the 22-acre property with 100,000 square feet of gaming space and 33,000 square feet of banquet and event space. Barnhill said employees are already speculating about improvements that Hard Rock might bring to Cincinnati.
'When is the hotel being built and when is the Hard Rock Cafe going into place? Those are the two questions that everybody's asked and I wish I had answers for it but not yet,' Barnhill said.
Jack Entertainment CEO Matt Cullen said he expects Hard Rock to 'get more into the entertainment aspect' of the Cincinnati property. He also expects improvements to Turfway Park. The Florence horse racing track has been exploring a potential investment in historical horse racing, which allows gamblers to bet on past races on a machine that's similar to playing slots, Cullen added.
Hard Rock declined to comment beyond its press release, which says improvements to the Cincinnati-area properties will be announced later this year.
“Hard Rock has been the number one operator in Ohio since opening in the greater Cleveland market in 2013,” said Jim Allen, chairman and CEO of Hard Rock International, in a press release. “And now, we look forward to introducing our unique brand of casino entertainment to Cincinnati.”
For Cullen, the deal completes more than a decade of work. As a principal in Rock Ventures LLC, a casino investment company founded by Detroit billionaire Dan Gilbert, Cullen was deeply involved the campaign to legalize gambling in Ohio. He oversaw development and construction of Downtown's casino.
'I feel really good about how that project came out,' Cullen said Friday. 'We're really selling it at the peak of the market.'
Cullen said the Cincinnati sale might be the last for Gilbert's casino enterprise, which agreed to sell Detroit's Greektown Casino-Hotel for $1 billion in November. Cullen said Rock Ventures might sell real estate assets in Northeast Ohio but it will continue to operate the Jack Casino and Jack Thistledown Racino.
'Cleveland is not for sale,' he said.
In an interview last fall, Macquarie Capital analyst Chad Beynon predicted a sale would have little impact on local jobs and might be good for gamblers - if the buyer was a national company with a solid loyalty rewards program. He also expected there would be lots of interest in the Cincinnati property.
“Ohio’s had one of the best gaming growth rates in the country over the past couple years,” Beynon said. “It still looks like it’s a growing market, certainly not mature.”
JACK Entertainment announced on Friday that it has completed the sale of its JACK Cincinnati Casino for $745 million. It is a two-part sale: VICI Properties acquired a JACK subsidiary that owns the land and real estate assets of the casino and Hard Rock International will take over the operations of the property.
Buy and rent
The portion of the sale price that VICI Properties shelled out was $558 million cash. VICI then entered into a triple-net lease with Hard Rock in which Hard Rock will pay $42.75 million rent per year for 15 years. After the initial lease term is up, Hard Rock can up to renew for five years as many as four times. In a triple net lease, the tenant (Hard Rock), takes care of building maintenance, real estate taxes, and insurance in addition to paying rent.
It may sound like a weird deal for Hard Rock, but by taking on those expenses, the total costs per year when combined with rent are likely less than what VICI would have charged for rent without the expenses. And Hard Rock will operate the property, therefore making money off of it like it would if it owned it. VICI, while maybe not getting as much as it could in rent if it took on the added expenses, gets a stable revenue stream for as much as a quarter of a century.
Hard Rock acquired the gaming assets of the casino for $187 million, bringing the total payment to JACK Entertainment to the aforementioned $745 million.
Executives gush
“We are pleased to officially welcome Hard Rock International and its world-renowned brand to the Queen City,” said Mark Dunkeson, Chief Executive Officer of JACK Entertainment, in a press release. “After ten years and hundreds of millions of dollars of investment developing JACK Cincinnati Casino from the ground up, we are confident that the property’s success will continue into the future as Hard Rock International takes it to the next level of growth.”
Dunkeson also thanked the casino staff for their hard work, adding, “We know they will continue to thrive under Hard Rock International’s leadership as they are known for their excellent culture.”
In addition to years of cash flow, VICI President and COO John Payne was thrilled with the deal, saying the company is “diversifying our geographic exposure by acquiring one of only four full-scale casino properties in the limited license state of Ohio, which continues to be one of the healthiest and fastest growing regional gaming markets across the country.”
JACK and VICI have a history
This is the second transaction between JACK Entertainment and VICI Properties to close this year as JACK Entertainment reduces its presence in the gaming industry. In May, it completed the sale of the Greektown Casino-Hotel, one of three casinos in Detroit. The deal was announced in November 2018.
Jack Ohio Casino Sales
In that sale, VICI Properties bought the land and real estate for $700 million, while Penn National Gaming acquired the operations of Greektown Casino-Hotel for $300 million, bringing the total deal to $1 billion.
Jack Ohio Casino Sales Tax
Jack Ohio Casino Salem
Like with the JACK Cincinnati acquisition, VICI entered into a triple-net lease agreement with Penn National. The lease timeframe and renewal options are the same with annual rent of $55.6 million.