The hospitality transaction market is continuing to grow as properties are changing hands across the country, including a $195-million deal for a Nevada casino resort and two sales in the South.
Century Casinos acquires Nevada casino resort in $195M deal
Century Casinos Inc. has entered into a definitive agreement to acquire 50% of Smooth Bourbon LLC (PropCo) and 100% of Nugget Sparks LLC (OpCo) dba Nugget Casino Resort from Marnell Gaming LLC for $195 million. The company will also have a five-year option to purchase the remaining 50% of PropCo for $105 million-plus 2% per annum.
The company will purchase its 50% interest in PropCo for $95 million, which represents a capitalization rate of 7.9% based on preliminary 2021 numbers. PropCo owns the land and building underlying the Nugget and will enter into a lease of the property to OpCo for an annual rent of $15 million. Following required approvals from the Nevada Gaming Commission, the company will purchase 100% of OpCo for $100 million, which represents an implied earnings before interest, taxes, depreciation and amortization, as adjusted before pro forma rent expense, multiple of 5.6x based on preliminary 2021 numbers. The estimated multiple excludes any potential cost synergies and operational improvements. The acquisition of OpCo is expected to meaningfully enhance the company’s free cash flow as well as be immediately accretive to earnings.
In connection with the acquisition, Goldman Sachs Bank USA has provided a commitment letter for $350 million in senior secured term loan financing to support the acquisition, refinance Century Casinos’ existing debt and for general corporate purposes and a $30-million senior secured revolving credit facility. On a pro forma basis upon acquisition of OpCo, the company anticipates net leverage to be approximately 3.0x.
“We have been looking at entering the Reno market for a long time, and we believe the Nugget is a perfect fit for our portfolio,” Erwin Haitzmann and Peter Hoetzinger, co-CEOs, Century Casinos, said in a statement. “We look forward to welcoming the great team at the Nugget to Century Casinos. We believe there is a lot of upside to this transaction and that we identified some areas of improvement to continue the Nugget’s growth. We expect the Nugget to seamlessly integrate and provide added synergies for Century Casinos’ U.S. portfolio.”
Nugget Casino Resort is located in Sparks, NV. The full-service resort includes a large gaming floor, two hotel towers, 110,000 sq. ft. of convention space, an 8,555-seat outdoor amphitheater, a variety of casual and fine dining options in addition to several on-site bars and lounges and a five-story 1,200-space parking garage and additional 1,272 parking spaces. The property consists of 50,200 sq. ft. of casino space, 859 slot machines, 29 table games, 1,382 hotel rooms and seven dining venues.
Upon closing of the OpCo acquisition, Century’s North American portfolio will increase to 10 casinos.
The PropCo transaction and the financing are expected to close early in the second quarter of 2022. The OpCo acquisition is expected to close within one year after the PropCo transaction, subject to required approvals of the Nevada Gaming Commission. Closing of both transactions is subject to customary closing conditions.
Goldman Sachs & Co. LLC served as sole financial advisor to Century Casinos in connection with the acquisition.
Marcus & Millichap arranges $2.425M sale of 60-room Super 8
Marcus & Millichap, a leading commercial real estate brokerage firm specializing in investment sales, financing, research and advisory services, has arranged the sale of Super 8 by Wyndham Greensboro/Coliseum/Conv., a 60-room hospitality property in Greensboro, NC. The asset sold for $2.425 million, according to Benjamin Yelm, regional manager of the firm’s Charleston and Charlotte Uptown offices.
Milin Mehta, Jack Davis, Chase Dewese, Joce Messinger and Josh Williams, investment specialists in Marcus & Millichap’s Charleston and Charlotte Uptown offices, had the exclusive listing to market the property on behalf of the seller, a private investor. The listing team also secured the buyer, another private investor. Yelm, Marcus & Millichap’s broker of record in North Carolina, assisted in closing this transaction.
“We were able to close this hotel within 99% of list price with a strong ownership group,” said Mehta. “This transaction reflects our team’s ability to identify capable investors who are willing to transact in the Carolinas.”
Courtyard Atlanta Alpharetta/Avalon Area Hotel sold
Alex. Brown Realty (ABR) and Hotel Development Partners (HDP) have sold the Courtyard by Marriott Atlanta Alpharetta/Avalon Area to an entity backed by JMREI and Lionshead Capital Partners. The Atlanta team of Hodges Ward Elliott brokered the transaction.
The ABR/HDP joint venture developed the 115-room Courtyard, which opened in early-2019. “We are proud to have brought this state-of-the-art Courtyard to Alpharetta,” said Allen O’Brien, CEO, HDP. Hotel Equities, an affiliate of HDP, managed the hotel on behalf of the joint venture. “It was extremely well-received and is among the finest examples of the Courtyard brand.”
Tom Burton, senior managing director/CIO, ABR, added, “We are extremely pleased with the attractive return that this investment has generated for our investors,” he stated. “The HDP team proved to be a strong partner and we look forward to working with them on future deals. The Courtyard hotel represents the first joint venture between ABR and HDP.”