Caesars Entertainment Corporation announced Monday that it plans to sell Rio All-Suite Hotel & Casino, an off-Strip property in Las Vegas, to an affiliate of Imperial Companies for $516.3 million.
Customers aren’t likely to see any immediate changes at Rio. Caesars will continue to operate the property for at least two years and pay $45 million in annual rent to Imperial, a New York-based real estate investment, development and management firm. Imperial has the option to pay Caesars $7 million to extend the lease for a third year and may request Caesars to continue to manage Rio or provide transition services.
The deal is subject to regulatory approvals, but is expected to close by the first quarter of 2020.
The 2,500-suite Rio will continue to be part of the Caesars Rewards network during the lease term. The World Series of Poker—a two-month event that draws thousands of competitors and fans—still will be hosted at the Rio in 2020 and Caesars Entertainment will subsequently retain hosting rights.
“This deal allows Caesar Entertainment to focus our resources on strengthening our attractive portfolio of recently renovated Strip properties and is expected to result in incremental EBITDA at those properties,” said Tony Rodio, CEO of Caesars Entertainment in a press release. “The retention of the World Series of Poker and retention of Caesars Rewards customers are all factors that make this a valuable transaction for Caesars.”
The sale of Rio was not a surprise. Caesars was expected to sell the hotel for several years and when the company announced it would provide $600 million in upgrades to several properties, it wasn’t included. Reno-based Eldorado Resorts Inc. is in the process of buying Caesars for $17.3 billion, and in June, Eldorado CEO Thomas Reeg announced that one or two of Caesars’ nine Las Vegas properties would likely be sold as part of their deal.
The June transaction stipulated that shareholders of Eldorado Resorts Inc. will hold about 51 percent of the company’s outstanding stock, with Caesars Entertainment Corp. shareholders holding the other 49 percent. The enlarged company will be called Caesars, but be based in Reno, Nevada, where Eldorado is currently located.