Jack sells Cleveland casinos to Vici for nearly USD 843 M

Jack Entertainment announced Monday that Vici Properties Inc. agreed to buy the real estate assets of the Jack Cleveland Casino and the nearby Jack Thistledown Racino for about $843 million in cash. Both properties will continue to operate under the Jack name.

Vici Properties’ portfolio consists of 24 gaming facilities leased to such names as Caesars Entertainment, Penn National Gaming and Hard Rock International. Billionaire NBA’s Cleveland Cavaliers owner Dan Gilbert is the chairman of Jack Entertainment.

John Payne, President and Chief Operating Officer of Vici Properties said: “Ohio continues to be one of the healthiest and fastest growing regional gaming markets and we are thrilled to add high-quality, urban real estate to our portfolio at an attractive capitalization rate."

Vici, which spun off from Caesars Entertainment in 2017, said that after paying “approximately $843.3 million in cash” it will enter a rental agreement with Jack calling for initial rent of $65.9 million a year for 15 years, with four 5-year tenant renewal options. 

Jack Entertainment said it would continue to invest in the Cleveland area. “Jack Entertainment looks forward to continuing to operate Jack Cleveland Casino and Jack Thistledown Racino,” said Mark Dunkeson, Chief Executive Officer of Jack Entertainment. “The combined efforts of our gaming properties together with the other Cleveland assets operated by our sister companies including the Cavs, Avenue Shops at Tower City and the May Company Building, have created a strong connection to the city and allows us to remain heavily committed to the Cleveland area. We will continue to invest significant capital into these properties which will have a lasting positive impact on the city and Cuyahoga County.”

The Rock Family of Companies, which includes Jack Entertainment, employs nearly 4,500 people in Greater Cleveland and has made nearly $2 billion in investments in Cuyahoga County, Jack Entertainment said. This investment includes $700 million in the downtown casino and the racino in North Randall.

The sale/leaseback agreement announced Monday, and which is expected to close in 2020, is the third deal in the last year involving Jack Entertainment properties.

In April, Jack Entertainment and Vici Properties announced a $780 million agreement for Jack to sell its Cincinnati casino along with Turfway Park in Kentucky to Hard Rock International and VICI Properties. The Cincinnati deal was completed in September, with Turfway Park awaiting regulatory approval. In November 2018, Jack announced an agreement to sell its Detroit Greektown Casino-Hotel for $1 billion to Penn National Gaming. The sale closed in May.

The Jack Cleveland Casino, which opened in 2012, has 96,000 square feet of gaming space, is connected to Ritz-Carlton and Renaissance hotels in downtown Cleveland, and it is Ohio’s second busiest casino of the state’s four casinos with $157.4 million in gambling revenue, after paying out winnings, through the first nine months of 2019, as reported by Cleveland.com. Hollywood Casino Columbus is No. 1 at $172.6 million.

Among Ohio’s seven racinos, Thistledown ranks fourth at $106.6 million this year. MGM Northfield Park is No. 1 at $188.5 million. The Jack properties have gained Cleveland/Akron market share since the Northfield Park operation was rebranded from the Hard Rock Rocksino to an MGM property in April.

Slots revenue at MGM Northfield Park totaled $124.2 million in the first six months under the MGM name, down 5.1% from $130.8 million during April through September last year as the Hard Rock. During the same six-month period, Jack Cleveland Casino revenue was up 5.7% to $104.9 million, and Jack Thistledown Racino revenue was up 12.6% to $73.1 million.