Caesars Entertainment announces sale of Harrah's Reno

Harrah's Reno will soon be coming to an end. The gaming establishment that had its humble beginning as a bingo parlor opened by Bill Harrah in 1937 has been sold to a company that will turn it into a non-gaming mixed-use center.

On Thursday, Caesars Entertainment Corporation and VICI Properties Inc. announced in a press release they signed an agreement to sell Harrah’s Reno Hotel and Casino to an affiliate of CAI Investments for $50 million.

The old casino and hotel will make way for a new town center project. The current 928 hotel rooms reportedly will become 530 rental apartments, new office space will occupy 150,000 square feet of the new center, and 78,500 square feet of retail space will be filled by restaurants, a bar, coffee shop, and grocery store.

“Being originally from the Reno/Sparks community, it is with great pride that we are investing in the Reno area by redeveloping this property,” said Christopher Beavor, CEO of CAI Investments (CAI). “CAI is excited to be working with Gryphon Private Wealth Management (GPWM) as capital partners for the project. Kirk Walton and Philip Oleson, Principals of GPWM Opportunity Zone Funds, which will be investing the required capital for the project, believe in the long-term growth potential of Reno.”

Some of CAI's past investment projects include Westin and Wyndham lodging properties, shopping malls, condominium projects, grocery stores and restaurants.

Under the terms of the agreement, Caesars will continue to operate the property upon closing of the transaction pursuant to a short-term lease with CAI, which will allow Caesars to cease operations at the property during the second half of 2020. At the end of the term, Caesars will deliver the property to the investment company and new development will commence.

“The sale of Harrah’s Reno demonstrates our ability to continuously work constructively with our tenants to improve our individual businesses. This disposition will allow VICI to optimize the quality of our real estate portfolio and redeploy the proceeds toward other attractive growth opportunities while maintaining the existing financial terms of the Non-CPLV Master Lease with Caesars,” said John Payne, President and COO of VICI Properties.

The proceeds of the transaction shall be split 75 percent to VICI and 25 percent to Caesars, while the annual rent payments under the Non-CPLV Master Lease between Caesars and VICI will remain unchanged.

“We recognize the long legacy of Harrah’s in Reno, where the brand began 82 years ago and our role in the community. We are pleased the Buyer is committed to the community and supports the redevelopment of this wonderful asset. We have worked closely with the Buyer to provide a reasonable closure plan that allows our great staff in Reno ample time to secure their next jobs, including priority consideration for relevant openings at our other properties in Nevada, including Lake Tahoe and Las Vegas,” said Tony Rodio, CEO of Caesars Entertainment.

In June 2019, Eldorado Resorts of Reno bought Caesars Entertainment for $17.3 billion, in a cash-and-stock deal that the companies said at the time would be the largest gambling company in the U.S. Since then, Eldorado has sold its Shreveport, Louisiana namesake casino for $230 million to Las Vegas-based Maverick Gaming, two casinos in Missouri and one in West Virginia to VICI and Century Casinos for $385 million, and Missouri and Mississippi casinos to Twin River Worldwide Holdings for $230 million.

According to the Nevada Independent, Eldorado is expected to announce the sale of Montbleu resort in Stateline in the coming weeks. With the new owners of Caesars Entertainment now in control of three of the major casinos on the South Shore, one of the properties was expected to go. They own the land where Harrah's and Harveys are located (except for Harveys' garage) and lease the land from Edgewood Properties where MontBleu is located.

The agreement allows for Caesars to retain its guest data and places no restrictions on Caesars’ marketing activities. Reno will continue to be part of the Caesars Rewards network during the term of the short-term lease with CAI.

The transaction is subject to the closing of the Eldorado/Caesars combination, regulatory approvals and other customary closing conditions.