A familiar sight on the Las Vegas Strip, The Venetian is slated for a makeover as the Venice-themed luxury resort is reportedly set to receive a significant influx of cash capital. Per a recent article, VICI Properties, the owners of the resort, plan to commit $700 million to “transform the Venetian Resort Las Vegas.” As a part of VICI’s Partner Property Growth Fund strategy, this capital injection seeks to finance a range of projects. This includes hotel room renovations, gaming floor optimization, and improvements to entertainment and convection amenities. VICI, a prominent real estate investment trust (REIT), unveiled the plans earlier this month for extensive refurbishment projects, marking a significant step in enhancing the renowned integrated resort’s offerings and guest experience.
In this article, SBS will be going over the latest gaming news coming out of Las Vegas along with more thoughts and notes about the state of Sin City gaming.
As noted in the same reporter, this capital infusion, part of VICI’s Partner Property Growth Fund strategy, aims to fund various initiatives. These projects are shown above, but of course showcase a vested interest in increasing the overall brand and appeal of the property and raising it to a higher level. Moreover, the article notes the upgrades are also there to help augment the property’s intrinsic value in the market.
According to John Payne, president and chief operating officer of VICI Properties, the partnership with the Venetian Resort underscores a commitment to innovation and progress within the hospitality sector. He also expressed enthusiasm about supporting impactful expansion endeavors at the Las Vegas landmark, citing the impressive performance achieved since VICI’s acquisition alongside funds managed by Apollo Global Management, Inc. in 2022.
Dave Kieskie, chief financial officer of VICI Properties also emphasized in the report the strategic alignment of the Partner Property Growth Fund strategy with the company’s overarching objectives. He highlighted the dynamic nature of VICI’s real estate assets and the potential for creative capital deployment to optimize operational efficiency and profitability.
Per the same article, the fund agreement entails an initial investment of $400 million to be disbursed in 2024, with an additional $300 million available for drawdown until November 1, 2026. Rent payments under the existing lease agreement will be subject to incremental increases, beginning on the first day of the quarter following each capital infusion, reflecting a 7.25% yield. Furthermore, the agreement stipulates that incremental rent hikes will commence annually at a rate of 2.0% from March 1, 2029, with subsequent escalations tied to either a fixed percentage or the Consumer Price Index (CPI), capped at 3.0%.
The Venetian Capital Investment is expected to be financed through a combination of cash reserves and the partial settlement of forward equity sale agreements. As the article notes, this underscores VICI’s prudent approach to capital allocation and investment management. Additionally, the Venetian Resort Las Vegas is relocating and expanding its poker room to a larger space on Level 2 of the Grand Canal Shoppes, set to open in the summer of 2024.
As noted in the report, in a broader context, this initiative perhaps exemplifies a growing trend among REITs, including VICI, to provide financing for tenant-driven enhancement projects in the gaming and hospitality sectors. Such arrangements not only diversify revenue streams for landlords but also contribute to the overall enhancement of property values, thereby benefiting all stakeholders involved.
One of the more noticeable properties on The Strip, The Venetian opened in May 1999 and was developed by renowned Las Vegas businessman Sheldon Adelson through his company, Las Vegas Sands. According to one source, The Venetian was built on the former site of the Sands Hotel and Casino, which was closed and demolished in 1996. The resort is, as noted earlier in this report, themed after Venice and has numerous landmarks from the city, including a canal with gondola rides.
Additionally, The Palazzo, a sister property with its own hotel and casino, opened north of the Venetian in 2007. If considered as a single property, the Venetian-Palazzo complex ranks as the second-largest hotel in the world, with approximately 7,100 rooms. Initially, the Venetian was built to accommodate convention-goers in particular, as Adelson felt that this demographic was underserved in Las Vegas. VICI Properties later purchased the land beneath the facilities for $4 billion in 2022.
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