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Massachusetts: Wynn completes sale of land, real estate assets of Encore Boston Harbor for $1.7B


Las Vegas-based gaming and hospitality giant Wynn Resorts announced Thursday that it has completed the sale of land and other real estate assets of Encore Boston Harbor in Massachusetts, for $1.7 billion in cash to San Diego-based Realty Income Corp. The net proceeds of the transaction will further strengthen the company’s global liquidity position to $4.4 billion.

Wynn, which also owns the Wynn Las Vegas and the Encore Tower on the Las Vegas Strip, will continue to operate the Boston-area resort under a lease with an initial annual rent of $100 million, for a term of thirty years with one thirty-year renewal option. The rent will escalate annually at a rate of 1.75% for the first ten years and the greater of 1.75% or CPI (capped at 2.5%) over the remaining initial lease term.

Encore Boston Harbor is described as a luxury resort destination featuring a 211,000-square-foot casino, 671 hotel rooms, a premium spa, specialty retail, 16 dining and lounge venues, and approximately 71,000 square feet of state-of-the-art ballroom and meeting spaces.

Situated on the waterfront along the Mystic River in Everett, Massachusetts, the resort has created a six-acre public park and Harborwalk along the shoreline. It is the largest private, single-phase development in the history of the Commonwealth of Massachusetts, according to Wynn.

Realty Income, which boasts more than 11,700 properties owned under long-term leases, said the deal marked its first acquisition in the casino industry. The sale-leaseback was announced in February, following several similar deals in Las Vegas involving massive hotels on or near the Strip including Bellagio, MGM Grand, Mandalay Bay, Aria, Vdara, and the Rio.

Earlier this week real estate investment trust VICI Properties agreed to buy Blackstone’s stake in MGM Grand Las Vegas and Mandalay Bay, further expanding its footprint in the gambling mecca. The deal values the two properties at $5.5 billion and is expected to be completed early in the first quarter of 2023

Wynn CEO Craig Billings previously put the kibosh on selling and leasing back its properties on the Strip, telling analysts in February that Las Vegas is “very different” from regional casino markets, and that the “need for continuous and sizable reinvestment in order to stay relevant is high,” as reported by the Las Vegas Review-Journal.

America’s gambling capital is an ultra-competitive market, dominated by big casino chains that operate massive resorts with ever-changing menus of amenities. If another downturn hit, Billings said he didn’t want Wynn to be in a position where it had to choose between paying rent and investing in its properties.

He also indicated that a sale of its Las Vegas real estate would trigger an acceleration in debt payments. “For now, we believe we will deliver far more long-term shareholder value by continuing to own our real estate in Las Vegas,” he said at the time, as reported by the cited source.

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